BUSINESS    LAW 

FOR 

ENGINEERS 


BY 


C.  FRANK  ALLEN 

\  * 

MEMBER   AMERICAN    SOCIETY   OF    CIVIL   ENGINEERS 

MEMBER    MASSACHUSETTS    BAR 

MEMBER   AMERICAN    RAILWAY   ENGINEERING   ASSOCIATION 

FORMERLY    PROFESSOR    OF    RAILROAD   ENGINEERING 

MASSACHUSETTS   INSTITUTE    OF    TECHNOLOGY 


PART   I 
ELEMENTS  OF  LAW   FOR  ENGINEERS 

PART   II 
CONTRACT  LETTING 

FIRST    EDITION 


McGRAW-HILL  BOOK   COMPANY,  INC. 

239  WEST  39TH  STREET,  NEW  YORK 


LONDON:   HILL  PUBLISHING  CO.,  LTD. 
648  BOUVERIE  ST.  E.G. 

1917 


COPYRIGHT,  1917 

BY 
C.  FRANK  ALLEN 


PREFACE 

WHEN  a  teacher  of  railroad  engineering  writes  a  book  on  law,  some  justi- 
fication ought  to  be  expected  from  him.  The  author  was  admitted  to  the 
Bar  of  New  Mexico,  and  practised  law  there,  serving  as  local  attorney  for 
the  A.  T.  &  S.  F.  R.  R.  and  as  City  Attorney  of  Socorro.  He  was  later 
admitted  to  practice  in  Massachusetts.  He  also  spent  several  years  as  a 
civil  engineer  in  water  works,  sewerage,  and  railroad  construction. 

The  purpose  of  this  book  is  not  to  make  "every  man  his  own  lawyer," 
but  rather  to  give  the  engineer  a  sufficient  understanding  of  important 
fundamental  features  of  law,  so  that  he  may  have  some  idea  of  when  or  how 
to  act  himself  and  when  to  seek  expert  advice,  as  well  as  to  enlarge  his 
horizon  and  perhaps  encourage  him  to  further  study  of  law.  Many  en- 
gineers will  find  that  there  is  some  chapter  which  covers  ground  concerning 
which  they  are  better  informed  than  the  author  or  than  most  practising 
lawyers.  They  will,  nevertheless,  probably  find  other  chapters  with  which 
they  are  less  familiar,  and  which  may  prove  interesting. 

This  book  can  treat  any  of  the  subjects  of  Part  I  only  briefly,  and  it  is 
hoped  that  it  may  be  judged  by  the  good  it  contains  rather  than  criticized 
for  omissions.  The  entire  ground  of  law  cannot  be  covered  in  the  space 
available.  The  preparation  has  extended  over  several  years,  partly  in 
trying  to  avoid  the  plight  of  the  business  man  who  once  apologized  for  a 
long  letter ;  he  had  not  time  to  write  a  short  one. 

Some  variation  in  the  style  will  be  noted  in  passing  from  Part  I  to 
Part  II.  In  the  latter,  the  words  Contractor,  Engineer,  Owner,  Company, 
City,  and  Board  are  capitalized,  as  these  parties  seem  to  be  more  clearly 
distinguished  by  this  means.  The  important  documents  which  constitute 
the  subjects  treated  in  Part  II,  as  Advertisement,  Proposal,  Contract,  Bond, 
Specifications,  and  Information  for  Bidders,  are  also  capitalized  for  a 
similar  reason. 

The  system  of  paging  is  unusual,  and  was  adopted  to  give  flexibility 
in  revision.  The  nature  of  the  book  is  such  that  later  revision  will  certainly 
be  desirable  and  even  necessary.  New  legislation  touching  corporations 
and  workmen's  compensation  acts  may  be  considered  certain.  The  adop- 
tion by  a  large  number  of  States  of  the  Uniform  Sales  Act,  or  some  sub- 
stitute for  it,  would  eventually  make  the  re-writing  of  the  chapter  on  sales 

iii 

3674.1  > 


IV 


PREFACE 


well-nigh  imperative.  The  art  or  the  practice  of  writing  the  forms  con- 
tained in  Part  II  is  likely  to  show  changes  and  advances,  and  new  material 
will  doubtless  come  into  the  author's  hands,  partly  as  the  result  of  this  book. 
Such  changes  as  seem  necessary  will  probably  be  made  first  by  additions 
to  chapters  rather  than  by  any  general  revision. 

The  author  desires  to  express  his  thanks  to  many  who  have  furnished 
him  with  advice  or  with  forms  of  contracts  and  items  of  information  other- 
wise. He  is  especially  indebted  to  Mr.  Homer  Albers,  Dean  of  the  Law 
School  of  Boston  University,  who  read  many  of  the  chapters  of  Part  I, 
and  to  Mr.  Roscoe  E.  Learned,  of  the  Boston  Bar,  who  read  other  portions 
of  the  book ;  also  to  Mr.  Frederick  H.  Fay,  of  the  consulting  engineering 
firm  of  Fay,  Spofford,  and  Thorndike ;  to  Mr.  James  W.  Rollins,  a  civil  en- 
gineer and  contractor,  and  president  of  the  Holbrook,  Cabot,  and  Rollins 
Corporation ;  and  to  Mr.  Charles  R.  Gow,  a  civil  engineer,  and  president 
of  the  Charles  R.  Gow  Company,  contractors,  all  three  of  whom  have  read 
most  of  Part  II  and  offered  valuable  suggestions ;  also  to  Professor  Charles 
B.  Breed  and  Professor  Carroll  W.  Doten,  both  of  the  Faculty  of  the  Massa- 
chusetts Institute  of  Technology,  the  former  of  whom  has  made  useful  sug- 
gestions covering  several  of  the  earlier  chapters,  while  the  latter  has  read 
substantially  all  the  text.  None  of  the  readers,  however,  has  read  the  text 
in  its  final  form. 

Grateful  acknowledgment  is  made  to  the  American  Railway  Engineering 
Association  for  permission  to  use  contract  forms  copyrighted  by  them ; 
also  to  the  American  Institute  of  Architects,  for  similar  permission  to 
use  their  copyrighted  forms. 

C.  FRANK  ALLEN. 

September,  1917. 


TABLE  OF  CONTENTS 
PART  I 

ELEMENTS  OF  LAW  FOR  ENGINEERS 

CHAPTER  PAGES 

I.    INTRODUCTION 1 1-16 

II.     EVIDENCE 2—1-18 

III.  CONTRACTS 3—1-16 

IV.  TORTS 4—1-18 

V.     EQUITY 5—1-16 

VI.     REAL  PROPERTY 6—1-22 

VII.     CORPORATIONS 7 1-29 

VEIL    AGENCY.    MASTER  AND  SERVANT 8 1-20 

IX.    SALES 9—1-17 

X.     NEGOTIABLE  INSTRUMENTS 1O 1-37 

XL     RAILROADS 11—1-16 

XII.    THE  ENGINEER'S  LEGAL  RELATIONS  WITH  OTHERS        .        .    12 1-13 

PART  II 
CONTRACT  LETTING 

XIII.  ADVERTISEMENT 13 1-17 

XIV.  INFORMATION  FOR  BIDDERS 14 1-18 

XV.    PROPOSAL 15—1-15 

XVI.  UNIFORM  CONTRACT  FORM 16—1-80 

XVII.  ADDITIONAL  CONTRACT  FORMS 17 1-45 

XVEII.  BOND 18— 1-11 

XIX.    SPECIFICATIONS 19—1-7 


PART  I 

ELEMENTS  OF  LAW  FOR  ENGINEERS 

CHAPTER  I 
INTRODUCTION 

Definition  of  Law.  Law  has  been  denned  by  one  of  the  most  noted 
legal  writers  as  a  rule  of  action.  This  definition  evidently  applies  to,  and 
includes,  the  laws  of  mechanics  and  many  other  natural  laws.  In  a  re- 
stricted sense  the  law  with  which  attorneys  and  courts  have  to  do  is 
sometimes  called  "  municipal  law/'  which  is  defined  by  the  same  lawyer 
as  "  a  rule  of  civil  conduct  prescribed  by  the  supreme  power  in  a  State, 
commanding  what  is  right  and  prohibiting  what  is  wrong."  It  is  with 
this  kind  of  law  that  this  treatise  is  to  deal. 

Purpose  of  Law.  It  should  be  observed  and  definitely  understood  at 
the  outset  that  the  purpose  of  law  is  to  secure  right  and  justice,  and 
as  great  a  measure  of  liberty  for  each  as  is  consistent  with  the  rights  and 
proper  privileges  of  others ;  it  relies  in  part  upon  usage  and  custom  as  to 
right  and  wrong.  That  hardship,  or  what  seems  injustice,  may  at  times 
result  from  the  workings  of  any  system  which  of  necessity  has  some  rigidity, 
ought  not  to  occasion  surprise  nor  provoke  harsh  criticism.  While  justice 
may  seem  in  some  cases  to  miscarry,  nevertheless  far  greater  respect  is 
felt,  and  properly  so,  for  the  judges  of  the  courts  and  the  work  of  the 
courts,  taken  as  a  whole,  than  is  felt  for  either  the  executive  or  the  legis- 
lative branches  of  the  government.  Much  of  whatever  dissatisfaction 
exists  with  the  results  of  court  trials  is  the  outcome  of  the  work  of  the 
juries,  whose  functions  in  court,  as  will  appear  later,  are  entirely  removed 
from  determining  what  the  law  is,  and  whose  errors  result  more  often 
from  inexperience  and  the  difficulties  of  the  situation  than  from  any 
conscious  bias  or  wrong  intent.  The  judges,  upon  whom  rests  the  duty  of 
determining  the  law,  are  as  a  rule  qualified  by  learning,  experience,  and 
temperament  to  perform  the  duties  required  of  them  and  are  in  general 
well  entitled  to  the  respect  almost  universally  accorded  them. 

1—1 


1-2  INTRODUCTION 

COMMON  LAW 

Common  Law  and  Statute  Law.  Law  is  conveniently  and  properly 
divided  into  two  kinds:  Common  Law  and  Statute  Law.  Of  these, 
Statute  Law,  as  its  name  indicates,  consists  of  laws  and  ordinances  passed 
in  set  terms  by  the  proper  legislative  bodies.  The  Common  Law  may  be 
properly  appreciated  if  it  be  stated  that  it  represents  the  determination 
of  what  is  right  and  wrong  as  found  by  the  judges  (or  "  courts  ")  to  which 
various  cases  have  been  submitted  by  parties  to  legal  controversies ;  the 
decisions  of  the  courts,  so  far  as  these  are  known  to  us,  are  found  in  the 
printed  reports  of  cases  which  have  been  decided  by  courts  of  sufficient 
dignity  to  warrant  perpetuating  their  decisions,  and  together  they  cover 
so  large  a  field  of  probable  dispute  as  to  form  a  fairly  complete  guide  as 
to  the  rules  of  conduct  prescribed  by  the  Common  Law. 

Definitions  of  Common  Law.  Not  only  do  the  decisions  of  the  courts 
as  found  in  the  reports  determine  for  us  what  is  the  law  in  a  case  referred 
to  it,  but,  in  addition,  we  find  in  the  reports  definitions  even  of  what  the 
Common  Law  is.  This  Common  Law  has  come  down  to  us  from  the 
mother  country,  and  a  Maryland  judge  thus  states  of  it : 

"The  English  Common  Law  is  derived  from  immemorial  usage  and  custom. " 
"It  is  a  system  of  jurisprudence  founded  on  the  principles  of  justice,  and  denomi- 
nated by  Blackstone  'the  perfection  of  reason/  The  evidences  of  its  existence  are 
the  treatises  of  men  learned  in  the  law  and  the  judicial  records  of  the  courts  of 
justice  of  England." 

Blackstone's  Statement.  Blackstone,  whose  treatise  is  the  oldest  and 
the  most  fundamental  of  those  generally  read,  says : 

"These  maxims  and  customs  of  the  Common  Law  are  of  higher  antiquity 
than  memory  or  history  can  reach,  and  nothing  is  more  difficult  to  ascertain  than 
the  precise  beginning  and  the  first  spring  of  an  ancient  and  long-established  custom." 

So  that  while  we  may  not  trace  the  progress  of  the  Common  Law  from  its 
beginning,  we  may  rightly  speculate  as  to  some  of  its  earlier  workings. 

Early  Example.  At  some  distant  time  in  the  past  it  doubtless  happened 
that  a  man  carrying  a  case  into  court  secured  a  ruling  as  to  what  the  judge 
considered  right  and  just,  and  in  harmony  with  prevailing  customs.  This 
man,  in  his  future  transactions,  carried  them  on  according  to  the  rule 
thus  established ;  but  in  this  early  day  when  a  second  case,  quite  like  the 
first,  was  tried  before  another  judge,  sometimes  a  contrary  ruling  was 
made.  It  is  quite  clear  that  this  produced  an  intolerable  condition  of 
affairs;  stability  of  business  procedure  became  an  impossibility,  and  a 
law-abiding  and  well-intentioned  man  could  have  no  fixed  rule  of  conduct 


INTRODUCTION  1-3 

for  his  guidance.  The  next  step  was  very  simple.  After  a  time,  when- 
ever a  legal  controversy  was  decided,  a  record  was  made  of  the  decision, 
in  writing  or  in  print,  and  this  record  became  available  for  presentation 
when  a  similar  case  came  up  elsewhere.  The  decision  made  by  one  court 
came  to  be  regarded  as  of  great  importance,  or  even  of  controlling  weight, 
in  determining  the  decision  of  the  second  court  or  of  any  future  court 
passing  upon  substantially  the  same  points  in  controversy.  In  this  way 
there  was  secured  the  advantage  (practically  a  necessity)  of  a  fixed  rule 
of  conduct  in  business  affairs,  or  affairs  of  various  kinds,  and  order  pre- 
vailed instead  of  something  like  chaos. 

Kent's  Statement.  Kent's  Commentaries  on  American  Law  is  a  book 
very  commonly  used  as  the  foundation  for  the  reading  of  American  law 
students,  and  Chancellor  Kent  describes  or  outlines  this  process : 

"The  Common  Law  includes  those  principles,  usages,  and  rules  of  action 
applicable  to  the  government  and  security  of  person  and  property  which  do  not 
rest  for  their  authority  upon  any  express  and  positive  declaration  of  the  will  of  the 
legislature."  "A  great  proportion  of  the  rules  and  maxims  which  constitute  the 
immense  code  of  the  Common  Law  grew  into  use  by  gradual  adoption  and  re- 
ceived, from  time  to  time,  the  sanction  of  the  courts  of  justice,  without  any  legis- 
lative act  or  interference.  It  was  the  application  of  the  dictates  of  natural  justice 
and  of  cultivated  reason  to  particular  cases." 

Rhode  Island  Opinion.  The  procedure  in  determining  the  law  in  a 
new  case  in  court  is  well  described  by  a  Rhode  Island  judge  in  a  way 
which  enlarges  our  outlook  over  the  Common  Law: 

"When  a  case  arises  which  is  not  affected  by  any  statute,  the  facts  therein 
being  fully  established,  the  question  first  to  be  considered  is:  Does  there  exist 
any  clear  and  well-defined  principle  of  Common  Law  which  directly  and  immediately 
controls  it,  and  determines  the  rights  and  obligations  of  the  parties?  If  no  such 
principle  is  found  to  exist,  the  question  next  presents  itself :  Is  there  any  principle 
of  the  Common  Law  which,  by,  analogy,  should  govern  it  ?  If  both  these  sources 
fail  in  furnishing  a  determinate  solution  of  the  controversy,  resort  must  next  be 
had  to  the  principles  of  natural  justice  which  form  the  basis  of  a  portion  of  the 
Common  Law;  and  should  these  principles  be  discovered  to  apply  in  a  full  and 
determinate  manner  to  all  the  circumstances  of  the  case,  they  are  adopted  and 

determine  the  rights  of  the  parties." 

• 

Evidently  this  decision  based  upon  the  "  principles  of  natural  justice  " 
becomes  in  its  turn  a  part  of  the  Common  Law  from  that  time  on. 

Example.  Innkeeper.  It  has  come  about  that  a  rule  of  conduct  or 
a  principle  once  established  under  the  Common  Law  stands  good  and 
sometimes  holds  even  after  the  passing  away  of  some  of  the  conditions 
which  had  been  instrumental  originally  in  determining  the  law.  For 
instance,  during  the  period  when  the  highway  robber  was  a  constant 


1-4  INTRODUCTION 

menace,  a  traveler  had  little  chance  to  protect  himself  either  in  traveling 
or  while  sleeping  at  the  wayside  inn.  It  was  possible  for  the  innkeeper 
to  furnish  protection  if  he  desired,  or  to  stand  in  with  robbers  if  it  would 
profit  him  to  do  so.  The  law  therefore  did  right  in  holding  the  innkeeper 
responsible  hi  case  his  guest  was  robbed,  and  under  the  Common  Law  the 
rule  even  now  holds  good,  although  the  conditions  are  so  changed  that 
the  necessity  hardly  exists.  As  a  result,  and  as  a  cure,  Statute  Law  has 
in  most  States  repealed  the  older  Common  Law,  so  that  the  innkeeper  is 
now  responsible  for  valuables  only  when  deposited  in  the  hotel  safe.  This 
provision  seems  wise  and  just,  for  without  it  there  would  be  today  more 
probability  of  collusion  between  some  guest  and  thief,  than  between  the 
hotel  keeper  and  a  robber.  A  rule  of  similar  origin  which  remains  un- 
changed, holds  that  a  railroad  company,  as  a  common  carrier,  is  fully 
responsible  for  the  safe  transportation  of  all  freight  intrusted  to  its  care, 
with  certain  unusual  exceptions  to  be  noted  later. 

New  York  View.  The  tenacity  of  the  Common  Law  has  been  in- 
dicated in  a  case  before  the  Supreme  Court  of  New  York,  where  it  was 
stated : 

"While  the  rules  of  the  Common  Law  and  the  result  of  the  application  of  its 
principles  will  vary  with  the  facts  to  which  it  is  applied  or  the  condition  under 
which  such  application  is  made,  the  fundamental  principles  of  the  law  remain 
immutable." 

Value  of  Stability.  Possibly  it  is  not  stating  the  case  too  broadly  to 
suggest  that  it  is  more  important  that  a  rule  or  principle  which  has  been 
once  well  established  should  remain  fixed,  than  that  it  should  seem  in 
all  cases  that  the  ruling  of  the  court  should  be  free  from  hardship  or  some- 
times apparent  injustice.  The  Supreme  Court  of  Indiana  has  gone  so  far 
as  to  say : 

"There  are  some  questions  in  law  the  final  settlement  of  which  is  vastly  more 
important  than  how  they  are  settled." 

This  is  especially  true  as  it  affects  titles  to  land.  Where  a  fixed  rule 
may  at  times  seem  harsh,  a  shifting  and  changeable  law  must  eventually 
work  much  greater  wrong,  injustice,  and  hardship.  It  is  wiser  on  the 
whole  that  the  settled  rule  should  continue  unless,  or  until,  a  sense  of  its 
injustice  under  changed  conditions  leads  to  the  proper  cure  by  Statute 
Law. 

Rules  Changed  for  New  Conditions.  It  is  not  quite  true,  however, 
that  the  courts  exercise  no  discretion  or  liberty  in  adapting  the  principles 
of  the  Common  Law  to  new  conditions.  While  slow  to  change  a  rule 
once  fixed,  it  is  sometimes  found  that  circumstances  and  conditions  have 


INTRODUCTION  1-5 

changed  sufficiently  so  that,  in  the  opinion  of  the  court,  the  rule  is  in- 
applicable. Sometimes,  but  very  rarely,  the  highest  court  of  a  State 
will  reverse  a  ruling  made  by  the  same  court  (differently  composed  prob- 
ably) at  an  earlier  date.  This  happens  so  seldom,  however,  as  not  to 
affect  the  general  proposition. 

Pennsylvania  Statements.  A  Pennsylvania  court  sheds  light  upon 
the  subject  in  stating  that : 

"The  Common  Law  of  the  United  States  is  composed  partly  of  the  Common 
Law  of  England,  and  partly  of  the  usages  which  have  grown  up  in  and  are  indigenous 
to  the  United  States.  When  the  ancestors  of  the  people  of  the  United  States 
emigrated  from  the  mother  country,  they  brought  with  them  such  principles  only 
as  they  deemed  expedient  for  the  situation  in  which  they  were  about  to  place 
themselves." 

A  similar  view  is  expressed  in  two  other  cases,  both  of  them  in  Pennsyl- 
vania : 

"  It  is  the  very  essence  of  Common  or  Customary  Law  that  it  consists  of  those 
principles  and  forms  which  grow  out  of  the  customs  and  the  habits  of  the  people. 
It  is  therefore  involved  in  its  very  nature  that  only  so  much  of  the  English  Law  as 
is  adapted  to  our  circumstances  and  customs,  is  properly  recognized  as  part  of 
our  Common  Law." 

"Common  Law  grows  out  of  the  general  customs  of  the  country,  and  consists 
of  definitions  of  these  customs  and  those  auxiliary  principles  that  naturally  accom- 
pany them,  or  are  deduced  from  them.  The  Common  Law  of  one  country  or 
century  is  not  necessarily  the  Common  Law  of  another,  because  customs 
change." 

Common  Law  in  Different  States.  Following  the  principle  of  these 
Pennsylvania  rulings,  it  happens  that,  under  the  different  conditions 
prevailing  in  various  States  of  the  United  States,  the  law  in  one  of  these 
States  has  come  to  differ  in  some  particulars  from  that  in  another,  although 
in  general  the  main  lines  of  the  Common  Law  will  be  the  same  throughout 
all  the  States.  Louisiana  alone  of  the  States  is  not  governed  by  the 
Common  Law;  another  system,  the  Civil  Law,  acquired  from  France, 
which  will  not  be  discussed  here,  has  attained  a  foothold  so  strong  that 
it  still  forms  the  basis  of  the  law  for  that  State.  Each  State  of  the  Union 
is  a  sovereign  State,  and  is  thus  independent  of  other  States  in  the  opera- 
tion and  control  of  its  internal  affairs.  Especially  is  this  true  of  its  courts, 
which  determine  its  laws ;  and  the  highest  court  of  any  State  (generally 
called  the  "  Supreme  Court  ")  is  not  controlled  or  bound  by  the  action 
of  the  courts  of  any  other  State,  nor  even  by  the  courts  of  the  United 
States  in  any  controversies  as  to  matters  within  the  State  when  the  parties 
to  it  are  citizens  of  that  State.  One  exception  is  when  there  is  some 
conflict  with  a  provision  of  the  Constitution  of  the  United  States;  in 


1-6  INTRODUCTION 

this  case  an  appeal  may  be  carried  to  the  Supreme  Court  of  the  United 
States.  Another  apparent  exception  lies  in  the  fact  that  the  United 
States  courts  are  available  and  a  proper  resort  for  the  trial  of  cases  or 
controversies  between  citizens  of  different  States. 

Systems  of  Courts.  In  each  State  there  are  courts  of  higher  juris- 
diction and  of  inferior  jurisdiction.  In  most  States  the  court  of  highest 
jurisdiction  is  called  the  Supreme  Court.  The  inferior  courts  are  designated 
differently  in  different  States;  in  Massachusetts  the  Superior  Court  is 
the  second  in  dignity ;  there  is  also  a  Municipal  Court ;  and,  as  in  most 
States,  there  are  also  the  minor  courts  presided  over  by  justices  of  the 
peace.  The  Supreme  Court  is  made  up  of  a  number  of  judges  who  to- 
gether act  in  determining  the  law  and  formulating  the  "  decisions  "  of 
this  Supreme  (or  highest)  Court ;  these  decisions  are  recorded  and  printed, 
and  it  is  now  well  settled  that  they  are  absolutely  binding  upon  any  lower 
court  in  the  same  State.  The  Supreme  Court  of  a  State  may  (but  very 
rarely  does)  reverse  an  earlier  decision  of  the  same  court,  as  has  already 
been  stated.  The  inferior  court  has  absolutely  no  discretion ;  it  is  strictly 
held  by  the  decisions  of  the  Supreme  Court  of  its  State.  While  the  de- 
cisions in  one  State  are  not  binding  upon  the  courts  of  another  State,  yet 
even  here  they  are  entitled  to,  and  do  in  fact  receive,  the  greatest  considera- 
tion, and  in  a  large  share  of  cases  will  be  accepted  as  conclusive.  It  is 
true,  however,  that  the  decisions  of  the  courts  of  some  of  the  States  are 
regarded  more  highly  than  those  of  other  States. 

Reports  of  Decisions.  In  this  way  have  grown  up  a  vast  number  of 
printed  reports,  and  from  the  decisions  found  in  these  reports  can  be 
extracted,  if  one  be  wise  and  skilful,  what  the  established  law  is ;  that  is, 
the  "  Common  Law."  It  should  be  understood  that  the  opinion  of  a 
judge  has  force  in  the  Common  Law  only  upon  the  points  specifically  in 
controversy  before  him.  Each  case  is  tried,  the  two  sides  are  presented 
by  their  respective  lawyers,  and  the  case  is  decided  in  harmony  with  other 
decisions  to  be  sure,  so  far  as  the  cases  are  parallel,  but,  so  far  as  new 
principles  are  involved,  according  to  what  the  court  believes  to  be  right 
and  just. 

Textbooks.  Textbooks  of  law  are  valuable  as  compilations  of  the 
law  as  found  in  law  reports ;  often  the  text  is  in  reality  a  series  of  quota- 
tions from  reports.  So  far  as  the  author  of  a  textbook  expresses  opinions 
of  his  own,  they  are  of  no  binding  force  upon  any  court,  and  are  valuable 
only  as  these  opinions  are  sound  and  likely  for  this  reason  to  favorably 
impress  the  mind  of  the  judge. 

Sense  of  Right  and  Justice.  So  far  does  the  spirit  of  right  and  justice 
enter  into  the  law  that  some  good  lawyers  believe  that  a  fine  sense  of  right 
and  wrong  is  well-nigh  the  best  equipment  any  lawyer  can  have.  A  keen 


INTRODUCTION  1-7 

sense  of  what  is  right  and  what  ought  to  be  the  law  in  a  special  case  will 
often  lead  to  the  discovery  that  this  is  in  fact  the  law. 

It  cannot  be  too  strongly  emphasized  that  the  fundamental  basis  of 
the  Common  Law  is  right  and  justice ;  with  this  is  a  recognition  of  the 
fact  that  in  many  cases  business  custom  determines  what  it  is  right  to  do, 
and  that  certainty  and  stability  as  to  right  action  are  essential  if  correct 
relations  and  conduct  are  to  be  secured. 

Value  of  Stability  for  Engineers.  Following  the  principle  underlying 
the  Common  Law  that  stability  is  a  prime  necessity,  it  would  add  much 
to  the  dignity  and  the  respect  accorded  to  the  profession  of  engineering,  to 
the  engineer  and  surveyor,  if  greater  stability  was  secured  from  their 
work.  A  boundary  line  once  reasonably  fixed  by  one  surveyor  should  be 
held  to  by  another  surveyor  unless  definitely  found  to  be  in  error.  In 
other  directions,  unnecessary  disagreements  should  be  avoided,  and,  so 
far  as  reasonable,  engineering  should  be  recognized  as  fixed  and  definite 
in  its  principles.  The  entire  profession  of  engineering  suffers  when  the 
work  of  a  reputable  engineer  is  unnecessarily  attacked  or  held  up  to  con- 
tempt. 

STATUTE  LAW 

Statute  Law  to  Meet  Changed  Conditions.  As  has  been  suggested 
previously,  it  will  be  found  sometimes  that  what  seemed  right  and  just 
a  hundred  years  ago  may  cease  to  be  right  and  just  now ;  this  is  one  reason 
for  the  passing  of  laws  or  statutes.  Statute  Law  serves  various  purposes ; 
it  sometimes  changes  the  older  Common  Law ;  it  sometimes  provides  for 
different  penalties,  or  different  legal  procedure.  In  any  case  it  does 
away  with  previous  law  inconsistent  with  it.  A  later  statute  as  a  rule 
repeals  all  earlier  conflicting  laws  whether  Statute  or  Common  Law. 

Definition.  Statute  Law  consists  of  acts  or  statutes  passed  in  set 
terms  by  the  proper  legislative  bodies.  It  may  be  divided  into  three 
classes;  declaratory,  remedial,  and  penal.  Sometimes  the  statute  is 
passed  for  the  purpose  of  clearing  a  doubt  which  may  exist  in  the  Common 
Law,  and  in  this  case  it  is  called  "  declaratory  "  ;  when  the  statute  is  passed 
to  remedy  what  seems  to  have  become  a  defect,  or  an  injustice,  in  the 
"  Common  Law,"  or  to  improve  the  procedure,  it  is  "  remedial,"  and  a 
statute  which  provides  for  the  imposition  of  a  penalty  is  called  a  "  penal  " 
statute. 

Example.  Interstate  Commerce  Act.  The  original  Interstate  Com- 
merce Act  of  1887  is  partly  declaratory,  as  where,  in  Sections  2  and  3,  it 
declares  it  unlawful  (which  was  already  the  case)  for  any  common  carrier 
to  charge  or  receive  from  one  person  more  or  less  than  from  another  for 
the  same  service,  or  to  give  undue  preference  to  one  over  another;  it  is 


1_8  INTRODUCTION 

partly  remedial,  where  in  Section  11,  a  commission  is  created;  also  where 
in  Section  15,  provision  is  made  for  a  hearing  rather  than  a  suit,  and  an 
opportunity  is  given  for  the  carrier  to  make  reparation  for  a  wrong  found 
to  be  done,  thus  providing  a  new  and  simple  remedy;  and  it  is  partly 
penal,  as  in  Section  10,  which  provides  that  for  infractions  of  this  act  by 
discrimination  in  rates  there  may  be  imposed  a  fine  or  sentence  of  im- 
prisonment. So  far  as  some  of  the  declaratory  clauses  lead  to  penalties 
in  later  sections,  the  whole  effect  becomes  penal  rather  than  otherwise, 
but  there  are  remedial  clauses  independent  of  penal  clauses,  so  that  this 
act,  or  law,  or  statute,  may  fairly  be  considered  to  combine  all  three  classes ; 
declaratory,  remedial,  and  penal. 

Constitutional  Questions.  It  has  already  been  stated  that  a  statute 
sets  aside  or  "  repeals  "  the  earlier  Common  Law  so  far  as  the  latter  is 
antagonistic  to  the  former.  It  should  further  be  understood  that  al- 
though the  state  or  national  government  has  three  different  sides,  execu- 
tive, legislative,  and  judicial,  it  may,  and  sometimes  does,  happen  that 
the  legislative  branch  passes  and  the  executive  approves  some  act  which 
is  illegal,  being  contrary  to  that  part  of  the  law  of  the  land  which  is  supreme 
and  enduring,  the  Constitution  of  the  State,  or  of  the  United  States. 
The  foremost  question  as  to  the  provisions  of  any  written  law  will  usually 
be  with  every  legal  mind,  "  Does  it  interfere  with  any  constitutional  provi- 
sion, State  or  federal?  "  In  case  it  does,  the  courts  declare  such  a  statute 
unconstitutional.  An  act  which  seems  unfair,  senseless,  unwise,  will  not 
be  set  aside  for  that  reason;  to  be  void  it  must  contravene  some  con- 
stitutional right  of  an  individual,  community,  or  State. 

Examples.  As  an  instance  of  constitutional  law  affecting  statutes, 
the  Constitution  of  the  United  States  provides  that  no  State  shall  pass  any 
law  impairing  the  obligation  of  contracts ;  State  constitutions  commonly 
provide  that  private  property  shall  not  be  taken,  even  for  a  public  use, 
without  just  compensation  and  without  due  process  of  law.  These  rules 
or  principles  are  meritorious  rather  than  technical  and  are  desirable  for 
every  one  to  keep  in  mind.  An  engineer's  judgment  on  either  of  these 
propositions  will  often  be  keen  and  correct,  and  justify  him  in  consult- 
ing competent  legal  authority  (insistently,  if  necessary)  for  an  opinion  on 
this  point.  The  engineer  finds  it  necessary  to  secure  by  right  of  eminent 
domain,  land  for  a  city  street,  for  a  reservoir,  for  a  public  water  supply, 
for  right  of  way  of  a  railroad ;  the  statute  which  provides  for  so  taking 
land  makes  provision  for  determining  the  compensation  to  be  paid,  and 
arranges  for  a  convenient  and  also  constitutional  legal  process. 

Master  and  Servant.  The  "  Employers'  Liability  Act "  or  statute  is 
not  without  interest  to  engineers  in  connection  with  the  discussion  in 
this  chapter,  although  it  will  be  treated  more  fully  later.  Under  the 


INTRODUCTION  1—9 

Common  Law  of  "  master  and  servant,"  the  master  is  responsible  for 
the  acts  of  his  servant,  or  employee,  performed  (or  neglected)  in  the 
line  of  his  duties.  This  rule  is  of  long  standing. 

Fellow  Servants.  Between  1830  and  1840  conditions  existed  which 
led  to  the  establishment  from  that  time  forward  of  a  new  rule  affecting 
many  cases,  the  law  of  "  fellow  servants."  Under  this  rule  of  the  Com- 
mon Law,  one  employee  could  not  recover  from  his  employer  for  injuries 
received  through  the  carelessness  or  neglect  of  a  fellow-servant  or  co- 
employee  in  those  cases  where  an  outsider  clearly  could  secure  compensa- 
tion if  injured. 

Law  Stated.  One  of  the  decisions  under  the  Common  Law  reads  as 
follows : 

"When  a  master  uses  due  diligence  in  the  selection  of  competent  and  trusted 
servants,  and  furnishes  them  with  suitable  means  to  perform  the  service  in  which 
he  employs  them,  he  is  not  answerable  when  there  is  no  countervailing  statute, 
to  one  of  them  for  an  injury  received  by  him  in  consequence  of  the  carelessness 
of  another,  while  both  are  engaged  in  the  same  service."  "The  ordinary  risks 
of  the  employment"  "are  taken  into  consideration"  "in  agreeing  to  the  terms  of 
the  contract,"  "including  the  negligence  of  competent  fellow-servants." 

The  employer  was  responsible  for  discoverable  defects  of  machinery  or 
apparatus  or  plant,  but  not  for  neglect  of  a  co-employee  if  proper  care 
was  exercised  to  provide  competent  and  suitable  workmen. 

It  became  difficult  sometimes  to  determine  whether  an  accident  was 
chargeable  to  a  co-employee  or  to  the  employer,  perhaps  where  a  piece  of 
apparatus  was  slightly  defective  and  was  carelessly  used  by  a  co-employee. 
After  a  time  the  courts  had  also  come  to  show  some  disposition  to  hold 
corporations  responsible  where  an  accident  was  caused  by  the  negligent 
or  improper  act  of  an  officer  high  in  authority  in  the  corporation,  in  one 
case  by  an  employee  no  higher  than  the  conductor  of  a  railroad  train. 

Employers'  Liability  Act.  Finally  in  1880,  in  England,  a  statute  was 
passed  known  as  the  "  Employers'  Liability  Act."  Afterwards  in  1885, 
1887,  and  at  other  times  later,  in  several  of  the  United  States,  similar 
statutes  were  passed.  These  somewhat  enlarged  the  responsibility  of  the 
employer,  specifically  holding  that  the  acts  of  the  superintendent  should 
not  have  the  effect  of  those  of  a  co-employee ;  while  in  the  case  of  a  rail- 
road the  Massachusetts  act  provides  that,  when  the  injury  results  from 
"  the  negligence  of  a  person  in  the  service  of  the  employer  who  was  in 
charge  or  control  of  a  signal,  switch,  locomotive  engine  or  train  upon  a 
railroad,"  and  the  injured  employee  did  not  contribute  to  the  negligence, 
he  shall  have  the  same  rights  as  if  he  had  not  been  in  the  employ  of 
the  employer;  and  this  has  been  liberally  construed  in  favor  of  em- 
ployees. The  Massachusetts  act  is  substantially  a  copy  of  the  English 


1_10  INTRODUCTION 

act ;  in  Indiana  and  Alabama  acts  somewhat  similar  have  been  passed. 
These  acts  although  in  part  apparently  declaratory  are  largely  remedial, 
and  their  constitutionality  seems  to  be  established. 

Federal  Act.  The  Congress  of  the  United  States  passed  a  similar 
act  applying  to  employees  of  railroads  engaged  in  interstate  commerce. 
The  constitutionality  of  this  United  States  statute  was  called  in  question 
on  the  ground  that  the  employment  of  an  employee  within  a  State  is 
not  a  matter  of  interstate  commerce  and  therefore  not  within  the  province 
of  United  States  action,  but  purely  a  State  matter.  The  United  States 
Supreme  Court  in  1908  decided  the  act  to  be  unconstitutional,  on  the 
ground  that  when  the  employee  is  not  engaged  in  interstate  work  (al- 
though the  railroad  may  be)  the  United  States  has  no  authority.  A  later 
act,  passed  in  1908,  was  intended  to  cure  the  defect,  and  apparently  has 
done  so. 

Illustration.  There  is  illustrated  here  the  older  rule  of  the  "  master 
and  servant,"  modified  later  purely  through  the  action  of  the  Common 
Law  under  the  rule  of  "  fellow  servants,"  modified  again  (constitution- 
ally) by  statute  by  the  "  Employers'  Liability  Act,"  while  the  earlier 
attempted  extension  by  United  States  legislation  illustrates  an  interest- 
ing case  of  a  statute  set  aside  because  unconstitutional. 

Construction  of  Laws.  When  a  statute  has  been  passed  it  becomes 
necessary  to  determine  what  it  means  (as  a  law) ;  and  the  law  states  clearly 
that  it  means  what  it  says;  it  is  not  always,  however,  entirely  easy  to 
determine  what  it  does  mean  or  does  say,  and  for  this  reason  certain 
rules  have  been  laid  down  by  the  courts  in  order  to  aid  in  determining 
the  meaning.  This  determination  of  meaning  is  technically  called  the 
"  construction  "  of  the  statute  (or  of  a  contract  or  of  any  document). 
Before  entering  critically  into  this  matter  it  may  prove  helpful  to  briefly 
consider  the  character  of  a  suit  at  law. 


LAWSUIT   AND    COURT  TRIAL 

Method  of  Bringing  Suit.  When  a  condition  of  affairs  exists  which 
seems  to  justify  a  lawsuit,  the  first  step  is  to  secure  from  the  proper  court 
certain  papers  so  that  the  necessary  notice  may  be  served  upon  the  person, 
sued,  who  is  called  the  defendant.  The  person  who  brings  the  suit  is 
called  the  plaintiff;  he  has  a  complaint  against  the  defendant.  The 
technical  features  of  these  papers  and  of  serving  them  are  matters  for 
the  lawyer,  and  not  for  the  engineer  or  any  layman.  It  is  well  for  the 
engineer  to  understand,  however,  that  the  correct  name  of  the  defendant 
should  be  known,  both  the  surname,  or  family  name,  and  the  given,  or 
Christian  name;  these  should  be  stated  in  full  to  secure  certainty  as  to 


INTRODUCTION  1-11 

the  party  sued.  The  middle  name  is  less  important  and  is  generally  not 
specified  in  full,  but  by  initial  only.  Using  the  first  initial  and  the  middle 
name  in  full  is  not  considered  good  practice  in  formal  legal  matters.  Com- 
plete identification  is  the  essential  point,  however.  For  all  legal  purposes 
the  full  Christian  name  should  be  given,  whatever  may  be  the  ordinary 
signature  of  a  person  or  popular  way  of  using  the  name.  It  is  worth 
while  to  suggest  also  that  in  any  suit  where  the  court  is  called  upon  to 
deprive  the  owner  of  control  of  property,  as  in  attachment  or  replevin, 
a  bond  is  required  in  many  States,  sometimes  for  twice  the  amount  of 
the  property  involved.  Statutes  have  been  passed  in  some  States  doing 
away  with  the  requirement  of  a  bond  in  attachment.  Where  a  bond  is 
necessary,  parties  who  can  give  bonds  in  satisfactory  amount  should 
therefore  be  secured  before  going  to  the  lawyer,  especially  in  cases  where 
the  party  bringing  the  suit  lives  at  a  distance  from  his  lawyer. 

Proceeding  In  Personam  and  In  Rem.  When  the  action  is  against 
some  person  who  is  summoned  into  court,  it  is  often  referred  to  as  a  pro- 
ceeding "  in  personam  " ;  and  the  remedy  contemplated  is  a  financial 
award  in  cases  at  Common  Law.  When  the  action,  however,  looks  to  a 
piece  of  property  which  is  either  to  be  returned,  or  else  acquired  as  security 
for  a  debt  and  sold  to  satisfy  it,  the  proceeding  is  "  in  rem." 

In  Personam.  In  actions  "  in  personam"  the  preliminary  paper,  the 
summons,  must  be  served  upon  the  defendant  personally,  or  perhaps  by 
leaving  it  at  his  residence,  or  possibly  in  some  other  way  authorized  by 
statute.  The  service  must  be  within  the  State  and  within  the  jurisdiction 
of  the  court.  Until  such  personal  service  of  the  summons  is  made,  the 
court  has  not  acquired  jurisdiction  of  the  case.  A  non-resident  cannot 
be  served  unless,  unwittingly,  he  enters  the  State. 

In  Rem.  In  a  proceeding  "  in  rem"  personal  service  is  not  required. 
A  man  must  look  after  property  which  he  owns,  so  that  notice  may  be 
given  by  tacking  the  summons  on  a  piece  of  real  estate,  or  seizing  goods 
by  attachment,  together  with  such  other  notice,  like  advertising,  as  the 
statutes  may  require.  While  the  court  in  the  latter  case  obtains  juris- 
diction of  the  case,  provided  the  property  be  within  the  jurisdiction  of 
the  court,  even  then  its  jurisdiction  will  not  support  a  judgment  for  money 
against  the  defendant  personally  if  the  property  reached  is  insufficient; 
the  jurisdiction  is  confined  to  the  property  reached  by  the  service. 

Appearance.  If  a  person  upon  whom  notice  has  not  been  served 
allows  his  lawyer  to  appear  generally  for  him  in  court,  this  act  is  held  to 
acknowledge  service,  and  the  court  then  has  jurisdiction. 

Pleadings.  The  next  thing  is  to  specify  distinctly  or  declare  what 
complaint  is  made,  and  this  is  the  work  of  the  lawyer  in  the  "  declaration." 
A  reply  to  this  is  made  by  the  lawyer  for  the  defendant,  and  by  a  series 


1-12  INTRODUCTION 

of  such  "  pleadings/'  as  the  term  is,  the  real  questions  at  issue  between 
the  parties  are  reduced  to  their  lowest  terms,  so  that  the  evidence  sub- 
mitted may  be  closely  directed  to  the  essential  points ;  unless  so  directed 
it  will  not  be  accepted. 

Examples.  For  instance,  A  sues  B  for  money  loaned.  B  says  A 
loaned  him  no  money. 

In  another  case  C  sues  D  for  money  loaned.  D  says  that  it  is  true 
he  borrowed,  but  that  he  has  paid  C  and  now  owes  him  nothing. 

In  another  case  E  sues  F  for  $100,  the  value  of  furniture  sold  F. 
F  rejoins  that  E  owes  him  $105  for  groceries  sold  E. 

Again  G  sues  H  for  10  barrels  of  cement  sold  him.  H  claims  failure 
of  consideration  because  the  cement  was  of  poor  quality  and  useless. 

Pleadings  by  Lawyer.  All  pleadings  are  formal  papers  requiring  the 
skill  of  the  lawyer.  The  engineer  is  likely  to  have  clearly  in  mind  the 
evidence  available  in  any  suit  in  which  he  is  interested,  and  this  evidence 
will  be  the  foundation  for  the  pleadings.  The  collection  of  evidence  is 
so  important  and  the  engineer  is  so  often  in  position  to  gather  evidence, 
that  the  next  chapter  will  deal  with  "  evidence,"  a  branch  or  subject  of 
the  law  very  important  to  the  engineer. 

Questions  of  Law  for  Judge.  When  the  case  comes  to  trial  before 
judge  and  jury,  if  all  the  evidence  is  harmonious,  as  is  sometimes  the 
case,  the  judge,  or  as  more  commonly  expressed,  the  "  court/'  decides 
what  is  the  law  applying  to  this  undisputed  state  of  facts ;  there  is  nothing 
left  for  the  jury  unless  to  bring  in  the  verdict  which  the  court  directs  them 
to  find.  Similarly,  if  all  the  facts  presented  by  the  plaintiff,  even  if 
true,  would  not  in  point  of  law  make  the  defendant  liable  in  this  case,  the 
court  will  properly  instruct  the  jury  to  bring  in  a  verdict  for  the  defendant. 

Questions  of  Fact  for  Jury.  When,  however,  the  evidence  presented 
is  inharmonious,  and  it  becomes  necessary  that  there  shall  be  some  means 
of  determining  what  part  of  the  evidence  is  to  be  accepted  as  true,  and 
what  part  rejected  as  false,  then  the  settlement  of  this  matter  is  for  the 
jury,  who  are  the  sole  judges  of  the  facts ;  for  example,  the  credibility  of 
witnesses,  or  what  was  the  position  of  a  signal  which  was  an  element  of  a 
railroad  accident,  or  the  condition  of  a  sidewalk  where  some  one  fell  and 
was  injured.  The  judge  is  not  allowed,  however  good  his  judgment, 
to  pass  upon  those  facts  which  are  in  dispute ;  this  is  for  the  jury  alone. 
On  the  other  hand  it  is  not  allowable  for  the  jury  to  determine  what  is 
the  law  in  the  case ;  the  jury  is  not  skilled  in  the  law  and  is  incompetent 
to  do  this.  The  judge  instructs  the  jury  what  the  law  is,  that  is,  so  much 
as  is  applicable  to  the  case  and  is  necessary  to  enable  them  to  reach  a  proper 
verdict,  which  must  rest  upon  their  findings  as  to  the  facts  combined  with 
the  judge's  instruction  to  them  as  to  the  law. 


INTRODUCTION  1-13 

Appeal  from  Judge's  Decision.  What  happens  if  the  judge  does 
(improperly,  unlawfully)  express  an  opinion  upon  a  matter  of  fact,  a 
function  exclusively  belonging  to  the  jury?  If  the  case  be  appealed  to 
a  higher  court  (as  from  the  Superior  Court  to  the  Supreme  Court),  anew 
trial  will  probably  be  ordered  as  the  result.  Supposing  the  judge  of  the 
lower  court  is  free  from  interference  with  the  jury's  duties  but  commits 
another  error  (through  misapprehension)  and  declares  that  to  be  the  law 
(applying  to  the  case)  which  is  in  reality  not  the  law ;  again  an  appeal  to 
the  higher  court  will  result  in  setting  aside  the  verdict  and  ordering  a 
new  trial  or  directing  a  different  verdict,  dependent  upon  the  circum- 
stances in  each  case. 

Setting  Aside  Verdict  of  Jury.  In  case  the  jury  makes  the  mistake  of 
substituting  its  own  ideas  of  justice  instead  of  following  the  instructions 
of  the  court  as  to  what  the  law  is,  the  situation  is  of  greater  difficulty,  since 
the  action  of  the  jury  is  secret  and  its  methods  of  reaching  a  result 
are  not  evident ;  apparently  to  meet  this  emergency  the  law  permits  the 
judge  to  set  aside  any  verdict  of  the  jury  which  he  regards  as  "  contrary 
to  the  law  and  the  evidence,"  and  even  here  a  refusal  to  set  aside  the 
verdict  may  be  overruled  on  appeal  to  the  higher  court,  if  this  decides 
that  he  should  have  set  it  aside.  If  improperly  set  aside  in  the  lower 
court,  again  there  is  a  chance  for  reversal  of  decision.  The  judge  in  the 
trial  of  a  case  needs  to  keep  his  head  clear,  and  to  possess  an  intimate 
knowledge  of  the  law,  so  as  to  avoid  rendering  any  incorrect  decision  as 
to  any  question  of  law  involved  in  the  suit. 

Mixed  Questions  of  Law  and  Fact.  While  the  duties  of  judge  and  jury 
may  be  stated  simply  enough,  nevertheless  the  line  of  cleavage  becomes 
in  some  cases  hard  to  determine.  For  instance,  when  there  existed  a  de- 
fect in  a  sidewalk  where  an  accident  occurred,  if  there  was  no  conflicting 
testimony  as  to  the  condition  of  the  sidewalk,  the  judge  might  properly 
decide,  as  a  matter  of  law,  whether  the  city  (or  the  owner)  was  negligent. 
If,  however,  there  was  some  conflicting  evidence  as  to  the  condition,  then 
the  jury  must  determine  what  that  condition  was,  and  in  connection 
with  this  must  find  whether  the  city  (or  the  owner)  was  negligent.  There 
is  a  mixed  question  of  law  and  fact,  and  the  jury  settles  this. 

Trial  Without  Jury.  The  lawyer  of  the  client  who  sues  the  city,  or 
railroad,  or  manufacturing  corporation,  will  generally  present  evidence 
of  a  character  which  raises  questions  of  fact  and  so  requires  that  the  jury 
shall  decide  whether  or  not  the  corporation  was  negligent.  Sometimes 
by  arrangement  between  parties,  the  jury  is  dispensed  with  for  some  par- 
ticular suit,  and  it  is  agreed  that  the  judge  shall  decide  in  that  suit  all  the 
questions,  both  of  law  and  fact.  This  is  a  wise  proceeding  in  those  cases 
(not  rare)  where  both  parties  to  the  suit  desire  what  is  right,  but  have 


1-14  INTRODUCTION 

an  honest  difference  of  opinion  on  it  and  desire  the  decision  of  some  one 
skilled  in  sifting  evidence,  as  well  as  competent  to  unravel  a  complicated 
set  of  accounts  or  a  mass  of  technical  evidence. 


INTERPRETATION   OR   CONSTRUCTION   OF   STATUTES 

Definition.  In  the  use  of  language,  uncertainty  and  ambiguity  are 
sure  to  occur.  Feebleness  or  imperfection  of  language  lends  itself  to  va- 
rious interpretations  put  upon  it  by  ambitious  fraud  and  also  by  honest 
difference  of  opinion.  To  settle  such  difference  some  tribunal  is  neces- 
sary, and  the  determination  of  the  meaning,  the  "  interpretation  "  or 
"  construction  "  of  a  statute  is  a  matter  for  the  judge,  and  is  quite  out- 
side the  functions  of  the  jury;  nor  can  the  legislature  interpret  it,  al- 
though it  may  by  a  new  enactment  change  the  law. 

Controlled  by  Common  Law.  Rules  of  interpretation  are  derived  from 
the  Common  Law,  and  since  that  law  constitutes  the  foundation  and 
primarily  the  body  and  soul  of  our  jurisprudence,  every  statutory  enact- 
ment is  construed  by  its  light  and  with  reference  to  its  cognate  principles. 
"Interpretation"  and  " construction "  signify  the  ascertainment  of  the 
meaning  and  intent  of  the  author,  and  this  intent  is  that  expressed  in  the 
instrument  itself ;  the  intent  is  what  the  writer  actually  expressed,  and  not 
what  he  may  have  intended  or  did  intend  to  say;  when  this  statement 
is  clear  and  unambiguous,  nothing  further  is  needed  or  is  considered  in 
law. 

Construe  as  a  Whole.  It  is  necessary  to  look  into  the  writing  as  a 
whole,  and  it  is  a  rule  of  law  that  every  part  (even  every  word)  shall  be 
given  effect  if  possible,  and  that  is  the  correct  construction  which  does 
harmonize  all  the  parts.  In  general  a  meaning  will  not  be  given  or  sup- 
plied if  the  maker  in  a  simple  way  could,  and  naturally  would,  have  ex- 
pressed that  meaning,  but  failed  to  do  so.  Where  two  constructions  are 
possible,  one  valid  and  the  other  invalid,  that  one  will  be  adopted  which 
is  valid.  Similarly  a  construction  is  adopted  which  shows  a  legal  purpose 
rather  than  an  illegal ;  effective  and  useful,  rather  than  frivolous ;  reason- 
able and  just,  rather  than  the  contrary;  nevertheless  the  clear  language 
and  intent  prevails,  and  an  argument  as  to  reasonableness  and  justice 
will  not  prevail  against  a  reading  showing  clear  intent.  Neither  does 
bad  grammar,  nor  wrong  spelling,  spoil  what  is  clear  in  intent. 

Intent.  When  a  construction  harmonious  throughout  cannot  be  se- 
cured, the  intent  is  still  the  thing  sought,  and  where  words  are  written 
into  a  printed  instrument  or  form,  the  written  words  are  held  to,  as  more 
surely  having  been  in  the  minds  of  the  maker  of  the  instrument.  The 
circumstances  attending  the  making  of  the  writing,  the  purpose  in  having 


INTRODUCTION  1_15 

the  paper  written,  are  proper  subjects  for  inquiry  when  nothing  more 
certain  is  available.  In  the  case  of  contracts,  anything  which  may  show 
in  what  way  the  writing  had  previously  been  interpreted  by  the  parties 
to  it  will  have  definite  weight.  While  punctuation  is  said  not  to  control, 
yet  if  the  clear  meaning  can  be  better  found  by  the  help  of  punctuation, 
and  not  without  it,  then  the  punctuation  is  important,  or  even  controlling. 
Clerical  errors  may  be  corrected,  words  added  where  clearly  intended,  or 
words  left  out  in  a  similar  way,  but  only  when  adding,  omitting,  or  cor- 
recting leads  to  maintaining  the  clear  intent.  Sometimes  meaningless 
words  will  be  rejected  as  surplusage;  but  in  general  a  strong  effort  will 
be  made  to  give  effect  to  every  word. 

Ordinarily  words  will  be  used  in  their  general  and  popular  sense  rather 
than  in  any  technical  sense ;  but  in  a  statute,  or  more  especially  in  a  con- 
tract covering  special  trade  or  technical  operations,  the  technical  rather 
than  the  popular  sense  will  often  be  clearly  intended.  Where  there  is  an 
irreconcilable  conflict  in  parts  of  a  statute  the  last  is  of  greater  weight 
and  will  control.  Where  an  inferior  court,  or  the  offiqers  even,  have  for 
a  long  time  acted  upon  a  certain  construction  of  a  statute,  a  higher  court 
will  hesitate  about  setting  aside  this  accepted  view  and  will  tend  to  stand 
by  the  Common  Law  principle  of  holding  to  usage  and  custom.  A  statute 
expressed  in  such  form  that  no  useful  construction  can  be  put  upon  it 
is  in  effect  void. 

Strict  or  Liberal  Construction.  Whether  statutes  shall  be  interpreted 
"  strictly "  or  "  liberally "  is  sometimes  of  considerable  importance; 
but  it  is  unsafe  to  attempt  in  this  short  treatise  to  lay  down  any  rules, 
since  these  oftentimes  have  sufficient  variation  locally  to  require  a  some- 
what careful  study  of  authorities.  In  general,  statutes  in  derogation  of 
Common  Law,  of  the  common  rights  of  individuals,  are  to  be  strictly 
construed;  for  instance,  the  statute  providing  for  mechanics'  liens,  it 
is  generally  held,  should  be  construed  strictly,  and  no  more  power  as- 
sumed than  the  strict  reading  allows. 

Repeal  of  Previous  Statutes.  The  rule  has  been  stated  that  a  later 
enactment  serves  to  repeal  not  only  the  Common  Law  previously  in  force 
but  also  probably  repeals  any  previous  statutes  or  parts  of  statutes  which 
are  inconsistent.  It  is  best,  however,  for  the  repealing  act  to  state  that 
"  all  previous  inconsistent  acts  are  hereby  repealed."  The  courts  do  not 
favor  repeal  by  implication,  and  an  act  well  drawn  will  leave  no  un- 
certainty on  this  score. 

Certain  Special  Words.  It  will  be  found  that,  in  the  case  of  certain 
words,  court  decisions  have  determined  the  meaning  under  the  Common 
Law.  For  instance,  the  words  "  and  "  and  "  or  "  are  very  commonly 
construed  as  equivalent,  although  not  always.  Again,  "  shall  "  is  some- 


1—16  INTRODUCTION 

times  construed  "  may,"  and  "  may  "  sometimes  construed  "  shall  " ; 
the  distinction  as  to  these  is  often  of  great  difficulty  and  the  true  intent 
is  not  easily  determined  by  the  layman,  not  always  even  by  the  experienced 
lawyer;  but  it  will  sometimes  depend  only  on  the  decision  of  the  court, 
which  in  a  close  case  is  sometimes  jocularly  said  to  "  have  the  last  guess  "  at 
the  meaning. 

Importance  of  Clear  Expression.  It  would  be  quite  improper  to  leave 
the  question  of  the  interpretation  of  writings  without  making  the  sugges- 
tion that  the  engineer  who  has  to  do  either  with  the  production  or  inter- 
pretation of  writings  can  have  no  better  preparation  than  a  thorough 
training  in  the  clear  expression  of  English  and  a  critical  analysis  of  its 
meaning.  The  school  training  must  be  supplemented  by  systematic 
individual  work  in  this  direction. 


CHAPTER  II 
EVIDENCE 

Definition.  Evidence,  in  a  legal  view,  is  the  means  by  which  any 
alleged  fact  is  established  or  disproved.  There  are  two  important  sides 
or  features  of  evidence;  first,  its  "  competency  "  ;  second,  its  "  weight." 
Competent  evidence  is  that  which  is  appropriate  in  its  nature  as  a  means 
of  proof.  Satisfactory  or  sufficient  evidence  is  that  amount  or  "  weight  " 
of  evidence  which  is  adapted  to  convince  a  reasonable  mind. 

Duties  of  Judge  and  Jury.  It  is  for  the  judge  to  decide  whether 
evidence  offered  is  competent  or  admissible;  the  jury  decides  as  to  the 
"  weight  "  or  sufficiency  of  evidence  presented  which  bears  upon  the 
point  at  issue;  that  is,  what  credit  shall  be  given  to  it.  The  jury  has 
no  opportunity  to  decide  whether  evidence  offered  shall  be  admitted ;  the 
judge  settles  this,  and  often  sends  a  jury  out  while  the  attorneys  argue 
whether  certain  evidence  ought  to  be  admitted  or  not. 

Erroneous  Rulings.  If  the  judge  rules  improperly,  in  view  of  prece- 
dents forming  the  Common  Law,  or  in  view  of  special  statutes,  this 
constitutes  an  error  on  his  part,  and  if  the  ruling  be  on  a  point  material 
to  the  decision  of  the  case,  it  probably  will  result  in  a  new  trial  being 
ordered  if  the  case  is  appealed  to  a  higher  court,  just  as  is  done  in  any 
other  case  of  misinterpreting  the  law.  The  judge  may,  and  occasionally 
does,  exceed  his  functions  by  passing  judgment  upon  the  "  weight  "  to 
be  given  to  certain  evidence  presented;  this  again  is  error  on  his  part. 
The  jury  is,  in  the  first  instance,  the  sole  judge  of  the  "  weight  "  of  evi- 
dence, the  credit  to  be  given  it;  but  after  the  verdict  of  the  jury  is 
rendered,  the  judge  may,  and  occasionally  does,  set  the  verdict  aside 
because,  in  his  opinion,  it  was  clearly  against  the  weight  of  evidence. 

When,  however,  the  judge  directs  a  verdict  either  because  the  evidence 
is  harmonious,  or  because,  even  if  true  it  makes  no  case  in  law ;  in  neither 
of  these  cases  does  he  pass  on  the  weight  of  evidence,  but  only  upon  its 
legal  effect,  and  this  lies  within  his  proper  functions. 

Standards  of  Evidence.  It  is  said  that  mathematical  truth  alone  is 
susceptible  of  actual  demonstration  beyond  possibility  of  error.  Demon- 
stration beyond  reasonable  doubt  is  the  utmost  that  can  be  demanded  or 

2-1 


2—2  EVIDENCE 

expected  in  ordinary  human  affairs.  In  criminal  trials  this  high  standard 
is  called  for;  evidence  conclusive  beyond  a  reasonable  doubt  is  required 
before  a  man  accused  can  be  convicted.  In  civil  cases  a  less  rigid  standard 
secures  more  satisfactory  results ;  here  proof  by  preponderance  of  evidence 
only  is  necessary,  quality  as  well  as  quantity  being  elements  in  the  pre- 
ponderance. 

Engineer  may  Secure  Evidence.  The  engineer  has  to  deal  with  the 
performance  of  contracts,  and  is  often  directly  in  contact  with  what  is 
done  in  connection  with  them.  Cases  of  negligence  or  of  trespass  are 
also  frequently  within  the  knowledge  of  the  engineer.  He  is  often  early 
on  the  scene  of  an  accident.  In  one  way  or  another,  therefore,  the  en- 
gineer is  on  hand  and  in  position  to  secure  facts,  evidence  then  obtainable 
but  soon  lost  through  changed  conditions,  so  that  it  is  of  great  importance 
that  he  should  have  some  knowledge  of  the  qualities  of  evidence  both  with 
a  view  to  its  competency  which  permits  its  introduction,  and  also  with  a 
view  to  its  importance,  in  getting  together  enough  facts  of  a  valuable  and 
convincing  sort,  so  that  the  interests  of  his  employer  shall  be  adequately 
protected.  Many  cases  in  court  have  been  lost  because  of  insufficient 
evidence  to  establish  actual  facts  favorable  to  one  party,  for  the  reason 
that  nobody  at  hand  had  knowledge  of  what  evidence  was  competent 
and  valuable,  and  of  how  and  by  whom  it  could  be  presented  in  court. 

Quality  of  Evidence.  Evidence,  and  particularly  the  evidence  of 
witnesses,  is  measured,  the  weight  to  be  given  it  is  determined,  first  by 
our  general  knowledge  and  belief,  to  which  evidence  commends  itself  as 
being  reasonable ;  second,  by  our  faith  in  human  testimony,  as  a  matter 
of  experience;  third,  by  the  influence  or  effect  of  other  collateral  facts 
presented  which  bear  upon  a  point  in  controversy.  The  value  of  the 
evidence  of  any  witness  thus  depends  on : 

1.  His  opportunity  of  observing  the  matter  he  relates. 

2.  His  powers,  natural  and  acquired,  of  perception  and  observation ; 
including  his  temperamental  qualities. 

3.  Whether  the  facts  in  question  were  sufficiently  within  his  experience 
and  training  to  have  secured  careful  observation. 

4.  His  memory,  taking  into  account  lapse  of  time  and  opportunity  for 
refreshing  memory. 

5.  His  reputation  as  to  honesty  or  his  apparent  honesty. 
These  are  matters  which  directly  appeal  to  juries. 

Classes  of  Testimony.  But  the  courts,  the  judges,  through  the  ex- 
perience of  years,  have  found  that  certain  classes  of  testimony  are  def- 
initely unreliable  and  should  not  be  considered,  and  so  should  not  be 
admitted  in  evidence ;  that  certain  other  classes  are  comparatively  unsat- 
isfactory and  should  be  admitted  only  when  more  reliable  testimony 


EVIDENCE  3_3 

has  become  unavailable.  In  such  ways  the  law  relating  to  the  admissi- 
bility  of  evidence  has  become  established. 

Irrelevant  or  Immaterial.  When  the  real  issues  in  a  case  have  been 
defined  by  the  pleading,  evidence  is  rejected  if  it  be  irrelevant  or  if  it  be 
immaterial.  In  either  case  it  not  only  adds  to  the  mass  of  evidence  (which 
is  undesirable)  but  it  further  opens  an  opportunity  for  the  jury  to  acquire 
a  prejudice  or  to  draw  conclusions  from  this  testimony  which  from  the 
law  point  of  view  are  all  wrong,  so  that  such  evidence  is  detrimental  to 
justice  and  properly  shut  out. 

Sometimes  evidence  is  temporarily  rejected  as  irrelevant,  and  after- 
wards admitted  when  a  foundation  is  laid  by  other  evidence  which  shows 
it  to  have  a  proper  bearing  on  the  case.  The  skill  of  the  lawyer  is  of 
importance  here,  and  the  engineer  may  often  aid  the  lawyer  in  a  pre- 
liminary conference,  for  the  reason  that  in  technical  matters  the  bearing 
of  facts  may  be  clearer  to  him  than  to  the  lawyer. 

Another  requisite  is  that  the  evidence  offered  shall  be  the  "  best  evi- 
dence "  available;  further  attention  will  be  devoted  to  this  point  later. 

Direct,  Indirect,  Circumstantial.  Evidence  may  be  divided  into  three 
main  classes ;  direct,  indirect  or  circumstantial  evidence,  and  real  evidence. 
Each  of  these  requires,  in  general,  oral  testimony  for  its  introduction. 

Judicial  Notice.  There  is,  however,  one  class  of  evidence  which 
requires  only  presentation  by  the  attorney  to  secure  its  acceptance  by 
the  court;  that  is,  evidence  of  which  the  court  will  take  "judicial 
notice." 

This  procedure  of  taking  judicial  notice,  like  that  of  having  the  plead- 
ings lead  to  as  simple  a  point,  or  points  of  controversy  as  possible,  is 
clearly  adopted  to  promote  simplicity  of  action  in  court  and  facilitate 
generally  the  conduct  of  the  trial.  There  are  many  matters  of  law  which 
it  is  within  the  province  or  the  duty  of  the  court  to  know,  and  which 
should,  and  do,  require  no  proof.  The  court  must  know  the  Common 
Law,  the  Constitution  of  the  State  and  of  the  United  States,  statutes, 
treaties,  law  of  nations,  municipal  charters  and  ordinances,  the  courts 
and  the  court  practice  within  its  own  State.  While  the  court  does  not 
take  judicial  notice  of  the  statutes  or  the  Common  Law  of  other  States, 
it  accepts  without  question  the  fact  that  the  printed  reports  of  another 
State  do  define  the  law  as  applied  in  that  State.  Most  of  the  above 
matters  the  court  is  under  obligation  to  take  judicial  notice  of.  In  many 
cases  the  court  may  exercise  discretion,  but  this  will  generally  be  exercised 
under  the  Common  Law  principle  of  following  precedent  when  the  cases 
are  substantially  identical  or  very  similar. 

Examples.  The  court  will  thus  judicially  notice  well-known  geo- 
graphical facts,  the  general  location  of  cities  or  counties,  but  perhaps  not 


2—4  EVIDENCE 

the  precise  boundaries  of  towns,  certainly  not  of  private  property ;  for  this, 
evidence  must  be  submitted.  It  will  judicially  notice  distances  or  the 
position  of  location  of  a  long-established  railroad ;  the  facts  of  the  almanac, 
including  the  time  of  sunrise  or  moonrise,  the  time  of  the  tides ;  tables  of 
logarithms,  astronomical  computations;  and  there  would  appear  to  be 
no  reason  why  other  tables  such  as  those  for  earthwork  computation,  or 
for  railroad  curves,  should  not  be  treated  similarly. 

As  a  further  example,  it  has  been  judicially  noticed  in  one  court  or 
another  that  the  Mississippi  River  at  New  Orleans  is  a  tidal  river;  that 
the  Connecticut  above  the  Holyoke  dam  is  not  a  public  highway  for 
commerce  with  other  States  or  countries.  The  court  takes  notice  of  the 
common  properties  of  matter  and  well-established  facts  of  science,  prob- 
ably of  much  more  now  than  forty  or  fifty  years  ago  when  school  instruc- 
tion failed  to  cover  such  matters;  that  photography,  for  instance,  is  a 
well-established  process  for  obtaining  correct  representations  of  objects 
or  scenes,  so  that  this  need  not  be  shown  (but  definite  evidence  must  be 
presented  that  a  particular  photograph  is  a  correct  representation  of  the 
things  shown  by  it).  There  are  many  matters  of  common  knowledge 
among  intelligent  people  which  need  not  be  proved  by  evidence.  The 
judge  may,  in  matters  of  knowledge  readily  ascertainable,  refer  for  his 
own  enlightenment  or  refreshment  of  knowledge,  to  a  cyclopedia  or  any 
book  or  source  of  information  he  pleases,  to  aid  him. 

Discretion  of  Judge.  These  matters  are  legal  technicalities  and  the 
determination  as  to  their  introduction  lies  in  the  discretion  of  the  court ; 
the  lawyer's  advice  is  both  available  and  necessary  as  to  the  matter  and 
the  manner  in  presenting  this  and  all  other  evidence  at  a  trial ;  never- 
theless it  is  extremely  desirable  that  the  engineer  should  have  some  work- 
ing knowledge  or  appreciation  whether  such  evidence  is  undisputed; 
it  is  often  of  importance;  the  opportunity  to  acquire  all  necessary  evi- 
dence may  occur  before  he  has  had  opportunity  for  preliminary  consulta- 
tion with  his  lawyer. 

Statutes.  In  some  States  there  are  special  statutes  governing  such 
testimony;  in  Iowa,  for  instance,  books  of  science  and  charts  made  by 
unprejudiced  parties  are  allowable  in  evidence  to  make  a  prima  fade  case  ; 
yet  the  court  here  has  held  that  an  extract  from  a  treatise  on  brakes  was 
not  admissible  to  show  the  distance  in  which  a  train  would  stop  when  it 
did  not  give  the  size  of  train,  pressure  of  brakes,  nor  the  grade;  and  in 
Iowa,  the  Railway  Age  has  been  held  not  to  be  a  book  such  as  is  admis- 
sible in  this  way. 

Instruments  of  Evidence.  The  instruments  of  evidence  are;  wit- 
nesses, real  evidence,  documents.  Of  these,  documents  are  generally 
the  most  definite,  and  for  that  reason  very  satisfactory.  They  include 


EVIDENCE  2—5 

writings,  printed  matter,  pictures,  maps,  diagrams.  The  method  of  intro- 
ducing these  will  be  taken  up  later. 

Real  Evidence.  Real  testimony  is  that  directly  brought  to  the  sight 
or  to  the  senses  of  the  court  or  jury,  who  are  thus  enabled,  by  inspection 
and  without  the  testimony  of  others,  except  to  identify  it,  to  appreciate 
and  understand  this  evidence.  A  coroner's  jury  has  real  evidence  of 
death  in  the  corpse;  in  murder  or  assault  the  pistol  or  ax  used  is  often 
put  in  evidence.  Persons  injured  and  brought  into  the  courtroom  con- 
stitute another  example  of  real  evidence.  In  case  of  an  accident  in  a 
machine  shop,  a  chain,  a  hook,  a  broken  iron  ring,  the  cause  of  the  ac- 
cident, are  in  the  courtroom  as  real  evidence,  partly  to  make  the  testimony 
and  descriptions  more  intelligible,  partly  so  that  the  fracture  of  the  ring, 
and  the  ring  itself,  may  be  inspected  by  the  jury. 

View.  It  is  not  uncommon  for  a  jury  to  "  view  "  a  piece  of  real  estate 
in  controversy,  or  the  scene  of  an  accident ;  when  the  roof  of  a  railroad 
car  was  blown  off  and  killed  a  man,  the  jury  "  viewed  "  the  roof,  which 
had  been  brought  into  a  warehouse  for  safe  keeping.  A  view  is  usually 
granted  when  the  jury  cannot  acquire  a  clear  or  proper  understanding 
of  the  premises,  or  the  object,  from  the  evidence  alone.  Whether  a  view 
shall  be  had  lies  in  the  discretion  of  the  judge. 

These  are  examples  of  real  evidence. 

Witnesses.  Although  the  evidence  of  witnesses  has  elements  of  weak- 
ness, it  is  nevertheless  the  most  important  of  all;  not  only  does  it  con- 
stitute a  large  part  of  that  presented  in  the  greater  share  of  cases,  but  it 
is  further  true  that  either  documentary  or  real  evidence  usually  requires 
some  basis  of  oral  testimony  as  a  preliminary  to  its  introduction. 

It  should  be  understood  that  a  witness  duly  summoned  into  court 
must  appear  and  give  testimony  to  any  facts  of  the  case  within  his  knowl- 
edge, under  penalty  of  fine  or  imprisonment  for  failing  to  appear,  or  for 
refusing  to  answer  the  questions  asked  him  (with  some  special  exceptions). 
Among  these  exceptions  a  witness  may  at  any  time  refuse  to  answer  a 
question  on  the  ground,  if  true,  that  his  answer  would  tend  to  incriminate 
himself.  Clearly  this  is  an  undesirable  position  for  a  witness  to  be  forced 
into.  A  witness  duly  summoned  is  also  liable  to  a  suit  for  damages  for 
failing  to  appear. 

Direct  and  Indirect  Evidence.  Direct  evidence  is  that  of  a  witness 
to  acts  which  he  saw  or  heard  or  which  impressed  themselves  upon  his 
senses,  or  to  facts  which  in  a  similar  way  are  within  his  knowledge,  when 
these  acts  or  facts  are  those  definitely  and  directly  in  issue. 

Indirect  evidence  on  the  contrary  is  similar  evidence  of  a  witness  to 
collateral  facts  or  acts  which  bear  upon  the  point  at  issue  and,  together 
with  other  testimony,  go  to  make  up  a  state  of  facts  from  which  the  fact 


2—6  EVIDENCE 

in  issue  may  legitimately  be  inferred  or  deduced.  A  series  of  circum- 
stances is  interwoven  in  such  fashion  as  to  be  inconsistent  with  any  other 
state  of  fact  than  the  one  sought  to  be  established,  and  so  become  convinc- 
ing although  no  direct  testimony  is  available ;  the  term  "  circumstantial 
evidence  "  is  probably  a  more  common  and  a  better  known  term  than 
"  indirect  evidence." 

Comparative  Value.  As  to  the  comparative  value  of  the  two  kinds 
of  evidence,  direct  and  circumstantial,  there  seems  to  be  some  divergence 
of  opinion.  Direct  testimony  is  probably  held  in  not  quite  as  high  re- 
gard by  judges  and  attorneys  as  it  is  by  the  jury  or  by  people  generally. 
It  is  a  well-known  fact  that  the  stories  of  direct  witnesses  will  differ  in 
detail,  sometimes  widely,  even  in  cases  where  there  is  no  suspicion  of 
fraud  or  dishonesty.  Few  people  are  accurate  observers,  and  memory 
plays  strange  tricks,  so  that  there  is  always  opportunity  for  error  even 
where  fraud  and  prejudice  are  absent. 

The  direct  witnesses  are,  in  the  nature  of  things,  few  in  number  in 
most  cases,  and  the  opportunity  for  false  and  fraudulent  testimony  is 
especially  good,  since  a  very  simple  story  commonly  suffices.  Circum- 
stantial evidence,  on  the  contrary,  to  be  effective,  must  have  its  parts 
fit  in  so  as  to  make  a  well-built  and  coordinated  case;  it  often  requires 
a  number  of  witnesses  who  must  testify  to  facts  which  together  form  a 
more  complex  case,  and  these  witnesses  must  hold  their  own,  often  under 
a  searching  cross-examination.  That  circumstantial  evidence  should 
often  be  more  conclusive  than  direct,  seems  altogether  logical.  Never- 
theless, the  human  mind  acts  in  such  a  way  that  the  average  juror  prob- 
ably tends  to  give  greater  weight  to  direct  evidence ;  an  index  of  that  is 
found  in  the  fact  that  men  are  plenty  who  will  refuse  to  convict  on  cir- 
cumstantial evidence  hi  a  murder  case  where  conviction  leads  to  capital 
punishment. 

BEST  EVIDENCE 

Best  Evidence  Rule.  Whether  the  evidence  be  direct  or  indirect, 
it  must  be  the  best  evidence.  The  "  best  evidence  "  rule  is  probably 
the  widest  known  of  the  rules  of  evidence  and  is  well  accepted,  although 
not  literally  followed  in  all  cases.  The  rule  is  that  the  evidence  presented 
shall  be  the  best  that  the  nature  of  the  case  will  admit ;  and  no  evidence 
is  admissible  which  shows  the  existence  of  better  evidence  unless  the 
absence  of  this  better  evidence  is  properly  accounted  for.  Under  this 
rule  the  best  evidence  of  the  terms  of  a  deed  for  land  is  the  writing  or 
deed  itself.  The  best  evidence  of  what  a  contract  covers  is  the  contract 
in  writing  (if  there  is  one  in  writing).  Oral  testimony  of  its  terms  is  in- 
ferior and  inadmissible,  so  long  as  the  written  contract  is  in  existence  and 


EVIDENCE  2—7 

available.  The  best  evidence  of  a  letter  is  the  letter  itself.  An  impression 
copy  from  a  copying  book,  or  a  carbon  copy,  is  not  received  if  the  original 
is  available.  Oral  testimony  is  necessary,  however,  to  present,  to  identify 
a  writing. 

Secondary  Evidence.  Secondary  evidence,  such  as  a  copy,  is  allowable 
only  when  the  original  is  not  available,  as  when  the  original  is  in  the  hands 
of  the  adverse  party  who  does  not  produce  it  after  proper  notice ;  or  when 
in  the  hands  of  a  stranger  who  cannot  be  compelled  to  produce  it;  or 
when  destroyed  or  lost ;  or  when  not  readily  movable ;  or  when  a  public 
document;  or  when  originals  are  numerous  documents  not  conveniently 
examined. 

When  one  party  has  in  his  possession  the  best  evidence  and  fails  to 
produce  it  when  duly  requested,  the  other  party  to  the  suit  may  present 
secondary  evidence,  and  there  are  no  degrees  recognized  in  this  case  as  to 
the  secondary  evidence.  While  a  written  copy  of  a  contract  or  letter 
may  exist  and  may  seem  better,  nevertheless  oral  testimony  is  admissible 
as  to  the  contents  of  the  letter.  The  written  copy  will  doubtless  be  more 
convincing  to  a  jury,  more  effective  in  weight;  the  oral  testimony  is 
equally  competent  and  will  be  accepted  by  the  judge  as  evidence,  the 
jury  to  determine  its  weight. 

Inadmissible  to  Contradict  Writing.  The  rule  is  general  that,  in  the 
case  of  a  written  contract  which  is  not  ambiguous,  it  is  inadmissible  to 
vary,  contradict,  or  modify  it  by  oral,  or  "  parole,"  evidence  of  anything 
which  occurred  at  or  before  the  time  it  was  executed.  This  has  been  the 
law  in  England  since  1771. 

In  case  of  apparent  ambiguity,  the  court  will  construe  it  if  possible 
and  find  its  correct  and  harmonious  meaning,  and  may  allow  some  oral 
testimony  as  to  the  technical  meaning  of  words  or  terms  if  that  will  assist. 
In  the  building  trades  there  are  technical  practices,  such  as  allowances 
for  openings  for  doors  and  windows  in  computing  the  payment  for  brick- 
work or  masonry,  and  if  not  covered  clearly  by  contract,  oral  testimony 
may  be  allowable  to  establish  what  is  the  custom.  Similarly,  oral  testi- 
mony might  be  admissible  to  determine  whether  or  not  the  prismoidal 
method  should  be  used  in  earthwork  computation. 

Writing  is  Best  Evidence.  As  has  been  stated,  in  proving  the  con- 
tents of  a  contract  or  other  writing,  the  best  evidence  is  the  writing  itself 
and  this  must  be  produced.  Where  any  documentary  evidence  is  not 
within  the  control  of  a  party  to  a  suit  who  desires  its  introduction,  a  reason- 
able notice  to  produce  it  should  be  served  upon  the  other  party  to  the 
suit  (if  in  his  control) ;  or  if  in  the  hands  of  some  third  party,  a  sub- 
poena duces  tecum  should  be  served,  a  summons  to  attend  the  trial 
and  bring  the  desired  documents.  A  failure  of  the  attempt  to  obtain 


2—8  EVIDENCE 

them  in  this  way  (faithfully  made)  allows  the  introduction  of  secondary 
evidence,  such  as  the  copy-book  page,  or  the  carbon  copy  of  a  letter,  or 
sometimes  as  a  last  resort  even  oral  testimony  as  to  the  contents  of  the 
document.  Before  the  secondary  evidence  will  be  allowed,  however,  the 
document  must  be  proved  to  be  in  the  hands  of  the  other  party  or  hope- 
lessly lost,  or  to  be  beyond  the  jurisdiction  of  the  court. 

Oral  Explanations.  Occasionally  the  only  writing  used  in  connection 
with  making  a  contract  is  a  receipt,  and  while  this  may  properly  be  sup- 
plemented by  oral  evidence  as  to  what  the  contract  was,  it  is  sometimes 
difficult  to  determine  whether  such  a  writing  is  a  simple  receipt  or  is  the 
expression  in  writing  of  a  completed  contract.  Sometimes  part  only  of  a 
contract  is  reduced  to  writing ;  perhaps  there  are  several  papers,  and  some 
of  these  require  to  be  supplemented  by  oral  testimony  to  explain  their 
connection.  An  offer  may  be  made  in  writing  and  accepted  orally,  or  vice 
versa.  Sometimes  oral  evidence  is  introduced  to  set  up  a  counter-claim. 

Additional  Oral  Contract.  Again  there  may  be  a  written  contract, 
and  an  oral  contract  upon  another  matter  or  upon  a  matter  which  possibly 
does  connect  with  or  infringe  upon  the  scope  of  the  written  contract. 
Sometimes  there  is  a  question  practically  of  implied  warranty.  In  a 
case  where  a  certain  machine  was  contracted  for  in  writing,  and  the  pur- 
chaser was  sued  for  payment,  the  purchaser  offered  parole  evidence  that 
there  was  a  definite  understanding  and  agreement  (aside  from  the  writing) 
that  the  machine  "  would  do  the  work  satisfactorily  " ;  the  court  held 
that  if  the  agreement  had  been  for  machines  to  do  this  work  therein  spe- 
cifically described,  there  would  have  been  an  implied  warranty,  and  from 
a  similar  point  of  view  allowed  the  oral  testimony  to  be  offered. 

Oral  Proof  of  Illegality.  Oral  evidence  may  be  presented  to  show  that 
a  contract  signed  was  obtained  fraudulently  or  under  compulsion.  Fraud, 
intimidation,  illegality,  want  of  due  execution,  want  of  capacity  in  con- 
tracting party,  want  or  failure  of  consideration,  mistake  of  fact ;  anything 
affecting  the  validity  of  a  contract  may  be  put  in  evidence  under  what  is 
called  the  "  parole  "  rule.  It  may  always  be  shown  by  oral  testimony 
that  the  transaction  was  not  intended  to  have  legal  effect,  or  that  while 
signed  the  contract  or  deed  was  never  delivered. 

Complete  Writing  Conclusive.  But  when  a  legal  act  is  reduced  into 
a  single  memorial  in  writing,  all  other  utterances  are  immaterial.  It  is 
well  established  that  you  cannot  disturb  a  clear  meaning  expressed  in  a 
writing.  But  if  agreements  are  made  subsequent  to  the  written  con- 
tract, oral  evidence  of  these  is  clearly  admissible;  they  are  essentially 
new  contracts.  The  careful  engineer,  however,  should  see  to  it  that 
his  contract  is  in  definite  and  complete  shape  in  writing,  and  further 
that  there  are  no  oral  transactions  of  a  sort  to  modify  the  contract,  or 


EVIDENCE  2-9 

such  as  to  be  admissible  in  evidence  to  supplement,  or  in  any  way  alter, 
the  effect  of  the  contract. 

All  doubtful  questions  involved  in  the  proposition  that  the  writing 
stands,  are  eventually  for  the  lawyer,  and  the  engineer  should  not  expect 
to  do  otherwise  than  consult  his  lawyer  when  a  fair  question  arises  in  his 
mind  as  to  the  admissibility  of  any  evidence  available. 

Engineer's  Relation  to  Secondary  Evidence.  The  admission  of  second- 
ary evidence,  apparently  contrary  to  the  "  best  evidence  "  rule,  is  rather 
technical ;  nevertheless,  there  is  a  principle  involved  which  the  engineer 
can  profitably  take  to  heart;  at  the  trial  his  lawyer  will  attend  to  the 
technicalities.  Any  evidence  of  apparently  good  quality  which  the  engineer 
can  secure  should  be  ready  for  presentation,  and  he  should  always  secure 
the  best  evidence  he  can  find  so  far  as  his  knowledge,  experience,  and  skill 
allow.  He  may  profitably  act  upon  the  principle  stated  by  a  very  able  law 
writer  that  all  facts  having  probative  value  are  admissible  unless  some 
specific  rule  forbids.  Nevertheless  it  is  worth  while  for  him  to  have 
some  knowledge  of  the  rules  which  restrict  the  admission  of  evidence. 

Best  Evidence  not  Personal  Quality.  It  should  be  understood  that 
the  standing  or  character  of  the  man  giving  evidence  has  no  bearing  so 
far  as  the  question  of  "  best  evidence  "  is  involved.  Whether  evidence 
shall  be  admitted  depends  on  the  quality  of  the  evidence  and  not  on  the 
character  of  the  man.  One  man's  evidence  is  as  good  as  another's  so 
far  as  its  competency  or  admissibility  is  concerned.  Before  the  jury, 
however,  the  situation  is  different  and  the  weight  given  to  any  man's  tes- 
timony may  be  much  influenced  by  his  standing  in  the  community,  by 
the  clearness  and  apparent  integrity  of  his  answers,  or  by  his  demeanor 
while  testifying. 

HEARSAY 

Definition.  Oral  evidence  must  be  direct  to  satisfy  the  rule  as  to 
the  best  evidence.  If  it  refers  to  a  fact  alleged  to  have  been  seen,  it  must 
be  the  evidence  of  a  witness  who  says  he  saw  it.  If  it  refers  to  a  fact 
alleged  to  have  been  heard,  it  must  be  evidence  of  a  witness  who  says 
he  heard  it.  If  it  refers  to  a  fact  alleged  to  have  been  perceived  by  any 
other  sense  or  in  any  other  manner,  it  must  be  the  evidence  of  a  witness 
who  says  he  perceived  it  by  that  sense  or  in  that  manner.  The  judge  will 
not  allow  Jones  to  testify  as  to  what  Smith  said ;  that  is  "  hearsay  " 
and  hearsay  evidence  is  ruled  out.  Let  Smith,  the  first  man,  come  him- 
self and  tell  what  he  saw  or  knew  to  be  the  fact ;  that  is  the  best  evi- 
dence. Statute  Law  has  in  some  States  provided  that  Jones  may  testify 
to  what  was  said  by  Smith  previous  to  the  bringing  of  the  suit ;  this  is 
not  true  in  many  States. 


2-10  EVIDENCE 

Why  Hearsay  Evidence  is  Excluded.  The  reasons  for  the  exclusion  of 
"  hearsay  "  evidence  have  been  stated  as  follows :  the  original  statement 
was  not  under  oath ;  there  was  no  chance  for  the  jury  to  see  the  demeanor 
of  the  original  witness ;  there  is  possibility  of  error  in  repetition  and  trans- 
mission ;  there  is  no  chance  for  cross  examination  of  the  original  witness. 
Of  these  the  last  reason  is  held  by  the  best  authorities  to  be  the  most  im- 
portant ;  the  meat  of  the  whole  matter. 

Exceptions.  While,  in  general,  the  exclusion  of  hearsay  evidence  is 
well  established  there  are  nevertheless  various  exceptions  which  are  very 
perplexing,  at  least  in  their  application.  Where  what  another  man  said 
is  definitely  the  point  in  issue,  and  not  the  truth  of  what  he  said,  evidence 
of  what  he  said  is  direct  and  of  course  admissible.  Such  evidence  is  also 
admissible  when  what  was  said  was  part  of  the  transaction;  what  is 
denominated  the  res  gestce,  what  was  said  forming  verbal  acts  which  were 
an  important  part  or  feature  of  a  transaction  the  rest  of  which  could  prop- 
erly be  established  by  evidence. 

Example  of  Res  Gestae.  For  instance,  in  Pennsylvania,  a  man  sued 
a  railroad  for  injuries  from  falling  on  the  platform  in  alighting  from  a 
train.  Declarations  made  by  this  man  while  he  lay  upon  the  platform 
where  he  fell,  were  allowed  to  go  in  as  evidence  as  part  of  the  res  gestce. 
In  Michigan  and  Illinois  in  cases  dissimilar  mainly  in  the  fact  that  the 
man  had  been  removed  from  the  spot  where  the  accident  occurred,  the 
evidence  was  not  admitted ;  the  declarations  were  made  not  during  the 
transaction  and  as  a  part  of  it,  but  afterward  and  distinct  from  the  affair. 
The  engineer  is  liable  to  encounter  similar  cases  where  accidents  of  various 
kinds  occur. 

State  of  Mind.  It  is  further  true  that  what  a  man  said  may  be  impor- 
tant as  showing  his  state  of  mind  and  become  admissible  for  that  purpose. 

Necessity  and  Trustworthiness.  It  will  be  found  that  there  are,  first 
and  last,  many  cases  where  hearsay,  indirect  testimony,  is  admitted. 
The  object  of  a  trial  is  to  elicit  the  real  state  of  the  transaction,  and  the 
rules  governing  the  introduction  of  testimony  have  relation  to  this  end. 
The  purpose  and  tendency  is  to  secure  all  pertinent  evidence  unless  its 
introduction  would  do  more  harm  than  good.  And  not  a  little  evidence 
of  the  hearsay  sort  is  admitted  substantially  on  the  combined  basis  of 
necessity  and  probable  trustworthiness;  either  one  alone  in  most  cases 
does  not  suffice.  As  to  trustworthiness,  it  should  be  understood  that 
the  term  is  here  applied  to  the  kind  or  quality  of  evidence,  independent 
of  the  merits  of  the  person  presenting  it  or  of  individual  features  of  a 
single  case  under  consideration. 

Statements  of  Deceased  Persons.  A  common  case  illustrating  neces- 
sity is  where  statements  were  made  by  persons  afterwards  deceased.  In 


EVIDENCE  2-11 

a  murder  case  the  dying  declaration  of  the  man  slain  is  accepted.  In  the 
shadow  of  death  it  is  assumed  that  there  is  not  sufficient  motive  to  mis- 
state, and  his  statement  of  the  cause  of  his  death  may  be  quoted  by  a 
witness  who  heard  it.  In  a  similar  way,  where  a  statement  was  made 
against  the  interest  (at  that  time)  of  him  who  made  it,  it  is  assumed  that 
there  is  no  motive  for  falsification,  and  where  death  or  inability  to  bring 
into  court  creates  necessity,  such  statements  are  frequently  allowed  to 
be  presented  by  one  who  heard  them,  or  if  made  in  writing,  by  one  who 
can  authenticate  the  writing.  The  statement  against  interest,  if  made 
by  a  party  to  the  suit,  is  in  effect  an  "  admission,"  reference  to  which  will 
be  made  later. 

Against  Interest.  Declarations  of  the  owner  of  land,  while  in  pos- 
session, in  disparagement  of  his  own  title  are  always  admissible  in  evi- 
dence. Sometimes  evidence  of  this  sort  touches  boundaries;  and  the 
declaration  of  a  deceased  may  be  in  the  form  of  a  map,  plan,  survey, 
or  the  like.  In  one  case  the  question  at  issue  was  the  height  of  a  dam ; 
the  declaration  of  the  former  owner,  now  dead,  stating  the  height  to 
which  he  had  a  right  to  build,  was  admissible  in  evidence;  this  height 
being  the  lower  height  of  those  in  controversy  and  so  against  his  interest. 
It  is  the  rule,  and  important,  that  such  declarations  should  have  been 
made  before  any  suit  was  started  touching  the  matter  involved. 

Pedigree.  In  the  matter  of  pedigree  and  family  history  there  is  often 
necessity  for  accepting  the  statements  made  by  a  deceased  member  of 
the  family,  and  generally  with  slight  risk  of  untrustworthiness  when 
made  previous  to  the  suit  being  brought.  Dependence  here  would  be 
placed  upon  the  declarant's  means  of  knowledge. 

Depositions.  Where  the  presence  of  a  witness  cannot  be  secured, 
there  are  cases  where  his  written  deposition  or  affidavit  may  be  taken 
and  admitted  in  evidence.  The  conditions  allowing  their  introduction 
place  them  beyond  the  engineer's  functions  to  handle  unless  under  in- 
struction. Nevertheless,  the  affidavit  of  a  person  who  witnessed  an 
accident  or  knew  certain  facts  may  be  very  desirable  to  secure.  The 
witness  may  be  liable  to  forget;  from  motives  of  friendship  or  other 
persuasion  he  may  later  be  willing  to  testify  contrary  to  the  facts.  The 
prompt  securing  of  his  affidavit  will  probably  forestall  all  such  difficulties. 
The  affidavit,  in  general,  will  not  be  admissible  in  evidence ;  but  if,  as  a 
witness,  the  man  who  made  it  should  deny  having  made  it,  then  there 
might  be  an  opportunity  for  its  introduction  to  impeach  his  testimony. 
The  mere  existence  of  such  a  paper  will  often  prevent  a  man  from  testify- 
ing contrary  to  the  statements  made  in  it.  A  statement  signed  but  not 
sworn  to  may  often  be  secured  where  a  sworn  statement  would  be  refused, 
and  this  is  almost  equally  good. 


3-12  EVIDENCE 

Entries  in  Course  of  Business.  Another  exception  to  the  "  hearsay 
rule  "  is  the  case  of  books  of  account,  or  other  records,  made  in  the  regular 
course  of  business ;  the  latter  feature  is  considered  essential  as  an  assurance 
of  substantial  accuracy,  including  freedom  from  attempted  misstatement. 
An  entry  or  record  in  such  a  book  must  have  been  made  as  a  part  of  a 
series  or  system  of  entries,  and  at  the  time  of  the  transaction  or  promptly 
after  it.  If  any  apparent  motive  to  misrepresent  should  be  apparent, 
it  would  render  the  evidence  unavailable. 

Surveyor's  Notes.  In  the  case  of  surveyor's  notes,  for  example,  it 
appears  not  to  be  necessary  (in  many  States  at  least)  that  the  person 
making  the  entry  should  himself  have  made  all  measurements  recorded, 
or  have  handled  all  articles  entered  in  the  book.  In  cases  where  they 
expect  to  testify  in  court  some  careful  surveyors,  in  making  surveys,  do 
read  every  angle  and  read  the  distances  measured  by  tape,  and  themselves 
plot  the  survey ;  and  this  amount  of  care  is  eminently  desirable  whether 
absolutely  required  by  law  or  not;  testing  the  tape  is  also  a  proper 
precaution. 

Book  of  Original  Entry.  It  is  not  always  necessary  that  the  man  who 
made  a  record  shall  be  at  hand  to  swear  to  it ;  the  book  containing  it  must 
be  proved  to  be  the  book  of  original  entry,  not  a  copy,  and  the  man  who 
made  the  entry  be  unavailable  at  the  trial.  A  note  book  containing  the 
record  of  a  survey,  or  a  log  book  of  experiments,  would  probably  be  classed 
with  other  books  of  original  entry.  The  book  itself  must  have  an  honest 
appearance  and  must  be  authenticated  as  a  book  of  original  entry. 

Refreshing  Memory.  Although  not  connected  with  the  hearsay  rule, 
it  may  be  stated  that  a  witness  occasionally  refers  to  a  paper  or  book, 
and  the  rule  seems  to  be  that  a  witness  may  use,  to  refresh  his  memory, 
a  paper  with  dates,  or  calculations,  or  other  memoranda,  made  reasonably 
contemporaneously  with  the  transaction,  provided  that  the  witness  testifies 
that  in  his  present  recollection  such  memoranda  are  correct.  It  is  less 
satisfactory,  but  will  probably  suffice,  if  he  testifies  that  in  his  present 
recollection  the  memoranda  were  correct  when  made. 

Reputation.  Reputation,  that  is  a  general  reputation  as  to  land 
rights  and  land  boundaries  of  a  public  character,  is  also  available  as  evi- 
dence, but  apparently  not  as  to  private  boundaries  except  so  far  as  these 
happen  to  coincide  with  public  lines.  The  courts  have  ruled  that  the 
boundaries  established  by  the  United  States  surveys  are  provable  by  evi- 
dence of  common  repute  when  the  monuments  have  disappeared.  Reputa- 
tion may  often  rest  on  old  maps  or  surveys  which  have  been  used  in  the 
community  sufficiently  to  have  acquired  a  reputation  for  correctness.  Old 
deeds  may  have  similar  effect.  In  a  Massachusetts  case  it  was  held  that 
the  location  (of  a  creek)  may  be  proved  by  reputation  and  tradition, 


EVIDENCE  2-13 

recitals  in  ancient  deeds,  and  the  evidence  offered  by  ancient  maps  and 
plans. 

Admissions.  Differing  in  many  ways  from  those  declarations  which 
may  be  established  by  hearsay  evidence,  are  admissions  by  a  party  to  the 
suit ;  that  is,  statements  or  actions  made  by  the  party  contrary  to  his 
present  position  in  the  suit  as  shown  by  his  pleadings  or  evidence.  State- 
ments by  other  parties  as  to  such  admissions  are  accepted  in  evidence. 
A  statement  by  Smith  that  Jones  owed  him  $50,  or  a  demand  for  $50  in 
payment  is  an  admission,  if  later  a  suit  for  $100  is  instituted  based  on 
the  same  transaction;  but  an  offer  to  settle  for  $50  rather  than  go  to 
suit  is  not  an  admission,  and  not  allowable  in  evidence  against  him.  A 
failure  to  deny  a  statement  made  by  any  outside  party  may  constitute 
an  admission  if  a  man  reasonably  careful  of  his  reputation  could  not  be 
expected  to  stand  by  without  contradicting  the  statement. 

Declarations  against  Interest.  In  somewhat  the  same  fashion  that  a 
declaration  against  interest  by  a  party  now  dead  is  admissible,  a  state- 
ment by  one  living,  in  disparagement  of  his  own  title,  is  an  admission 
and  may  be  presented  in  evidence.  Where  the  point  in  issue  was  whether 
a  landlord  or  his  tenant  had  the  duty  of  keeping  a  platform  in  repair,  the 
landlord  repaired  it  after  an  injury  had  occurred;  this  was  held  an  ad- 
mission of  his  duty  to  repair  it.  An  admission  by  an  agent,  within  the 
limits  of  his  authority,  will  bind  the  principal  who  is  a  party  to  a  suit. 
Oral  admissions  should  always  be  received  with  some  caution ;  the  judge 
controls  their  reception  as  evidence,  but  the  weight  to  be  given  them,  if 
introduced,  is  finally  for  the  jury  to  determine. 


DOCUMENTS 

Documents.  Documentary  evidence  has  been  stated  to  include 
writings,  printed  matter,  pictures,  maps,  and  diagrams.  Documents  are 
public  or  private.  Private  documents  must  be  introduced  by  evidence 
of  their  authenticity,  usually  by  oral  testimony.  Every  kind  of  private 
writing,  except  ancient  documents,  must  be  proved  to  have  been  made 
by  the  party  whose  act  it  purports  to  be  in  order  to  render  it  properly 
admissible  in  evidence;  this  may  be  by  the  testimony  of  those  who  can 
testify  to  the  fact  of  its  execution,  or,  in  some  States,  by  virtue  of  the  ac- 
knowledgment by  a  notary  or  other  qualified  official.  When  a  document 
has  been  attested,  the  evidence  of  the  attesting  witnesses  may  be  re- 
quired in  many  States,  but  the  tendency  now  appears  to  be  to  require 
the  testimony  of  an  attesting  witness  only  for  documents  (like  wills) 
which  are  required  by  law  to  be  attested ;  for  other  writings  the  signatures 
may  be  proved  by  one  who  saw  them  made  or  otherwise  knows  them. 


2—14  EVIDENCE 

Public  Documents.  Documents  of  a  public  nature  and  of  public 
authority  are  admissible  without  the  same  authentication  required  for 
private  writings;  and  copies  certified  by  the  proper  officers  are  often 
used.  Oral  accounts  of  the  contents  of  a  document  given  by  some  person 
who  has  himself  seen  it  are  in  some  cases  admissible.  The  advice  of  the 
attorney  is  essential  in  determining  the  probable  admissibility  of  evidence 
of  this  character. 

Documents  Prima  Facie  Evidence.  Documents  are  said  to  be  only 
prima  facie  evidence ;  other  evidence  may  be  presented  to  offset  or  over- 
come them.  Nevertheless,  in  many  cases  no  other  evidence  of  equal  quality 
can  be  found  and  often  no  evidence  combating  them  will  be  considered 
admissible.  Documentary  evidence  of  certain  kinds  thus  becomes  well- 
nigh  conclusive.  It  may  properly  be  mentioned  here  that  any  erasure 
in  a  document  tends  to  subject  it  to  suspicion ;  occasionally  a  document 
contains,  just  above  the  signature,  a  statement  that  a  certain  number  of 
words  were  interlined  on  a  given  page,  and  this  represents  good  practice. 

Ancient  Documents.  Ancient  documents  (more  than  thirty  years 
old)  need  not  be  proved  in  the  ordinary  way ;  but  their  age  must  be  proved 
and  generally  by  some  one  who  has  seen  them  more  than  thirty  years 
before.  Their  appearance  must  inspire  confidence,  and  they  must  have 
come  from  a  custody  apparently  not  improper,  from  a  custody  reasonable 
and  probable  in  view  of  the  character  of  the  document.  For  instance, 
old  surveys  found  in  a  surveyor-general's  office  have  been  accepted. 

Ancient  documents  ordinarily  have  qualities  as  evidence,  as  to  whether 
relevant  or  material,  no  different  from  other  documents;  but  they  have 
been  admitted  in  some  cases,  where  as  modern  writings  they  would  not 
be  admissible,  as  evidence  of  boundaries,  title,  existence  of  highways  and 
of  watercourses,  and  other  purposes  not  of  interest  here. 

MAPS,  DIAGRAMS,   AND  MODELS 

Maps,  Diagrams,  Models.  Special  attention  may  properly  be  given 
here  to  maps,  diagrams,  and  models ;  a  map  of  a  site  or  a  parcel  of  land ; 
a  diagram  or  a  model  of  a  structure,  a  machine,  or  a  mine.  One  defini- 
tion of  a  map  is  that  it  is  a  transcript  of  a  region  which  it  portrays,  nar- 
rowed in  compass  so  as  to  facilitate  an  understanding  of  the  original.  If 
the  map  is  to  be  used  in  this  sense,  and  is  to  constitute  substantially  di- 
rect evidence  to  this  end,  it  must  have  the  testimony  of  a  witness  to  support 
it.  When  its  accuracy  is  thus  established,  it  takes  its  place  in  evidence 
as  a  non-verbal  means  of  expressing  a  witness's  testimony.  This  is  well 
established  and  the  rule  holds  as  to  models  and  to  diagrams  of  various 
sorts,  including  photographs ;  these,  like  other  diagrams,  must  be  proved 


EVIDENCE  2  —15 

to  be  true  by  proper  witnesses.  In  this  way  they  are  pictorial  testimony 
given  by  qualified  witnesses. 

Official  Maps.  Official  maps,  like  any  official  documents,  are  received 
on  the  basis  of  their  official  character  and  without  other  proof  of  their 
accuracy,  which  is  prima  fade  assumed,  but  which  may  be  disproved 
by  presenting  evidence  sufficient  to  discredit  it.  The  lithographed  maps 
published  by  the  U.  S.  Geological  Survey  are  frequently  made  with  direct 
authorization  and  cooperation  on  the  part  of  the  State,  and  apparently  in 
their  official  character  should  be  admissible  in  evidence. 

Maps  for  Illustration.  But  diagrams,  maps,  and  models  may  be  used  in 
another  way,  when  they  are  not  introduced  as  direct  evidence.  It  is  well 
established  that  they  may  be  used  to  illustrate  oral  testimony,  even 
though  they  be  not  drawn  to  scale,  provided  some  witness  testifies  to 
their  substantial  accuracy,  no  matter  who  made  them.  This  can  often 
be  done  without  formally  introducing  the  diagram  or  model  in  evidence. 
A  witness  may  even  make  a  diagram  while  testifying;  he  may  use  one 
he  finds  satisfactory,  even  if  made  by  another,  provided  that  it  serves  to 
make  his  testimony  clearer  and  does  not  tend  to  mislead  the  jury.  It  is 
always  desirable  that  a  map,  diagram,  or  model  should  be  given  full 
credit  by  the  testimony  of  him  who  made  it  and  knows  it  to  be  correct. 
In  that  case  it  has  full  and  direct  value  as  evidence.  Nevertheless,  a 
diagram  not  thus  sponsored  may  be  of  great  value,  and  should  not  be 
discarded  unless  ruled  out  by  the  judge ;  even  in  this  case,  it  may  be  an 
error  for  him  to  reject  it,  and  an  appeal  from  his  decision  may  be  taken 
by  the  attorney. 

Privileged  Communications.  Certain  evidence  is  not  admissible,  but 
is  "  privileged,"  as  it  is  called.  A  lawyer  may  refuse  to  divulge  any  com- 
munication made  by  his  client  as  privileged,  and  this  is  at  Common  Law. 
The  same  rule  holds  between  physicians  and  patients ;  this  is  not  a  Common 
Law  privilege,  but  statutory  in  many  States.  It  seems  proper  also  that 
the  rule  should  apply  to  communications  in  the  nature  of  confessions  be- 
tween a  member  of  a  church  or  congregation  and  his  clergyman  or  pastor. 
This  is  not  Common  Law,  but  prevails  largely.  This  privilege  is  in  favor 
of  the  client,  the  patient,  the  church  member,  and  may  be  waived  by 
them.  A  similar  privilege  exists  for  communications  between  man  and 
wife,  but  this  privilege  in  many  instances  cannot  be  waived  by  either 
man  or  wife. 

OPINIONS 

Opinions.  While  an  expert  may  express  opinions  and  is  often  called  upon 
to  do  so,  the  ordinary  witness  may  not  in  general  express  opinions.  The  law 
holds  the  jury  to  be  as  competent  as  the  ordinary  witness  where  a  matter 


3-16  EVIDENCE 

of  opinion  is  involved,  and  so  is  slow  to  allow  a  witness  as  to  facts  to  ex- 
press any  opinion  as  to  the  quality  or  effect  of  facts  which  have  come  to  his 
knowledge  through  his  senses,  of  sight,  hearing,  or  otherwise. 

Exceptions.  The  witness  may,  however,  express  opinions  as  to  certain 
things,  such  as : 

1.  The  age  of  a  man  he  has  seen ; 

2.  Identity  of  a  person  or  object ; 

3.  Appearance  of  a  person  —  intoxicated,   angry,   sad,  nervous,   or 
apparently  in  pain ; 

4.  Concerning  another's  health  —  sick,  or  rational  or  insane,  looking 
well  or  ill ; 

5.  Habits,  as  intemperate ; 

6.  Actions  —  strange  or  childish,  or  short  in  answers ; 

7.  Character  —  eccentric  or  fickle ; 

8.  Reputation  —  good  or  bad. 
And  opinions  are  received  as  to  : 

1.  Size,  color,  weight  or  quantity; 

2.  Time  or  distance ; 

3.  Direction  and  character  of  sounds ; 

4.  Whether  an  act  was  in  insulting  or  jocular  manner ; 

5.  How  an  object  or  an  act  appeared ; 

6.  Value; 

7.  Cold,  heat,  light,  or  darkness ; 

8.  Dispositions  of  pernicious  animals ; 

9.  Sometimes  the  sufficiency  of  object  for  purpose  intended. 

Expert  Testimony.  There  is  necessity  oftentimes  for  an  analysis  of 
cause  and  effect,  and  the  bearing  of  facts  in  a  more  complete  way  than 
the  experience  of  the  jury  (or  even  the  judge  when  trying  a  case  without 
a  jury)  would  secure.  Accordingly  "experts  ",  as  they  are  termed,  may 
testify  to  their  opinions  concerning  the  facts  in  the  case.  Before  anyone 
may  testify  in  this  way,  however,  he  must  be  shown  to  be  competent. 
Expert  testimony  will  receive  some  attention  in  a  later  chapter. 

BURDEN  OF  PROOF 

Definition.  When  a  man  brings  suit  against  another  it  is  necessary 
in  law  for  him  to  prove  his  case;  if  he  alleges  that  the  man  sued  owes 
him  money,  he  must  offer  evidence  to  that  effect ;  unless  he  does  so,  the 
man  sued  need  not  prove  that  he  does  not  owe  him,  and  need  not  offer 
any  evidence.  The  "  burden  of  proof  "  is  on  the  party  suing. 

If  one  man  alleges  a  debt,  and  the  second  denies  it,  and  the  testimony 
of  one  appears  to  be  as  good  as  that  of  the  other,  and  there  is  no  other 


EVIDENCE  2-17 

evidence,  the  case  falls  to  the  ground ;  there  is  no  preponderance  of  evi- 
dence ;  the  burden  is  on  the  plaintiff,  and  the  plaintiff  loses. 

If,  in  the  pleadings  that  bring  the  case  to  issue,  the  defendant  admits 
receiving  money  but  alleges  payment,  the  burden  of  proof  then  rests  on 
the  defendant  to  prove  payment,  and  with  no  preponderance  of  evidence, 
the  defendant  loses. 

Placing  the  Burden.  In  bringing  a  case  to  issue  through  the  pleadings, 
there  is  some  opportunity  for  skill  in  placing  the  burden  of  proof  upon  the 
opposite  party ;  this  is  for  the  lawyer ;  but  the  engineer,  in  collecting  evi- 
dence, is  at  some  advantage  if  he  has  a  proper  notion  as  to  where  the 
burden  is  likely  to  rest. 

The  rule  in  a  general  way  is  that  the  party  who  finds  it  necessary  in 
his  case  to  affirm  that  a  fact  in  dispute  is  true  or  is  not  true,  has  in  sub- 
stance the  affirmative,  and  the  burden  of  proof  is  on  him;  this  burden 
he  must  support  by  a  preponderance  of  evidence  in  civil  cases ;  in  criminal 
cases  beyond  a  reasonable  doubt.  One  test  as  to  the  burden  of  proof  is 
as  to  which  party  would  be  successful  if  no  evidence,  or  if  no  more  evi- 
dence, were  given. 

The  burden  of  proof  rests  on  the  party  who  wishes  to  support  his  case 
by  a  particular  fact  peculiarly  within  his  knowledge,  or  of  which  he  has 
special  means  of  acquiring  knowledge,  even  though  this  requires  proving 
a  negative.  The  party  who  finds  it  necessary  to  go  forward  with  evidence 
not  in  negation  of  that  presented,  sustains  the  burden.  These  are  some 
of  the  views  which  have  been  advanced. 

Shifting  Burden.  When  evidence  has  been  presented  sufficient  to 
make  a  prima  fade  case  in  favor  of  him  on  whom  the  burden  of  proof 
rests,  his  opponent  has  two  courses  open;  first,  to  combat  this  evidence 
by  other  evidence  opposed  to  it,  to  destroy  the  preponderance ;  or,  second, 
to  introduce  evidence  leading  in  another  direction,  for  instance  to  show 
that,  if  true,  the  evidence  presented  fails  to  make  a  case  against  him. 
This  raises  a  new  issue  and  was  at  one  time  thought  to  shift  the  burden  of 
proof,  but  at  present  it  seems  to  be  good  law  that  the  burden  never  shifts. 

Burden  both  for  Competency  and  Weight.  There  may  be  said  to  be 
two  sides  to  the  burden  of  proof.  On  one  side  then  there  is  a  burden  on 
the  proper  party  to  bring  to  the  judge  evidence  of  competent  character 
tending  to  prove  his  case,  and  sufficient,  if  true,  to  prove  it.  On  the 
other  side  the  evidence  which  is  submitted  must  be  sufficiently  persuasive 
to  convince  the  jury  by  a  preponderance  of  evidence,  even  though  some  of 
it  may  be  disputed  by  testimony  from  the  other  side. 

The  importance  of  the  burden  of  proof  is  evident;  the  scope  of  this 
treatise  does  not  justify  an  extended  discussion  of  this  somewhat  intricate 
question. 


2 -IS  EVIDENCE 

Lack  of  Evidence  Presented.  It  has  not  infrequently  happened  that 
a  case  has  been  lost  when  sufficient  evidence  was  at  hand,  because  either 
the  attorney  was  unskilled  in  presenting  his  evidence,  which  was  ruled 
inadmissible,  or  was  unfortunate  either  in  the  questions  asked  his  wit- 
nesses or  in  their  dullness  in  answering  suitably,  so  that  he  was  unable  to 
bring  out  the  evidence  necessary  to  be  presented  by  his  client  on  whom 
the  burden  of  proof  rested.  No  effective  evidence  was  presented,  and 
the  case  was  lost.  Such  a  result  has  sometimes  been  due  to  failure  to 
prepare  the  case  properly  beforehand. 

Persuasiveness.  On  the  other  hand,  with  regard  to  persuasiveness, 
much  depends  upon  the  presence  and  clearness  of  testimony  of  a  witness, 
and  much  finally  on  the  skill  with  which  the  evidence  is  presented  to  the 
jury,  depending  upon  the  arrangement  and  clearness  of  presentation  of  the 
facts,  and  perhaps  the  eloquence  or  personal  magnetism  of  the  attorney. 

Summing  Up.  When  all  the  evidence  desired  (or  admissible)  has  been 
presented  by  both  parties  to  the  suit,  each  attorney  has  opportunity  to 
sum  up,  to  bring  to  the  attention  of  the  jury  the  facts  which  seem  to  him 
important,  and  to  arrange  these  in  such  a  way  as  to  make  a  clear  and 
favorable  presentation  of  the  claims  of  his  client.  The  judge  finally 
"  charges  "  the  jury,  that  is,  instructs  them  as  to  the  law  pertinent  to  the 
facts  presented  in  the  case,  but  in  this  country  without  expressing  any 
opinion  whatever  as  to  the  probable  truth  of  matters  in  dispute  as  shown 
by  the  testimony.  It  remains  only  for  the  jury  to  retire,  to  deliberate, 
and  to  bring  in  their  verdict,  if  they  succeed  in  agreeing,  which  is  com- 
monly, but  not  always  the  case  in  civil  trials. 


CHAPTER  III 

CONTRACTS 

Contracts.  It  is  the  purpose  of  the  law  to  secure  to  every  man  justice 
and  as  great  a  measure  of  freedom  and  liberty  as  is  consistent  with  the  rights 
of  others.  In  a  community  the  rights  of  one  man  cannot  be  secured  except 
by  placing  upon  others  certain  obligations  and  duties  towards  him,  and  from 
him  also  are  demanded  like  concessions  in  order  to  secure  and  protect  the 
rights  of  others.  The  law  therefore  has  formulated  many  duties  and 
obligations.  For  instance,  the  law  expects  a  man  to  do  what  he  has  seriously 
agreed  to  do  if  another  will  suffer  by  his  failure  to  do  it.  We  have  thus  the 
Law  of  Contracts. 

Torts.  In  a  similar  fashion  the  law  demands  that  a  man  shall  refrain 
from  many  actions  which  will  interfere  with  the  rights  of  others.  A  man 
shall  not  unwarrantably  deprive  another  of  liberty ;  he  shall  not  be  negli- 
gent and  careless  of  others  to  the  extent  of  injuring  them;  he  shall  not 
trespass  upon  the  property  of  another ;  he  shall  not  maintain  a  nuisance  to 
the  disadvantage  of  his  neighbors.  We  have  thus  the  Law  of  Torts.  Con- 
tracts and  Torts  constitute  the  best  known,  the  most  important  branches  of 
law,  and  the  present  chapter  is  devoted  to  the  Law  of  Contracts. 

Definition.  A  contract  is  a  voluntary  agreement,  between  two  or  more 
competent  parties,  for  a  valid  consideration,  to  do  or  abstain  from  doing 
some  lawful  act.  A  contract  may  or  may  not  be  in  writing.  Many  con- 
tracts are  oral. 

Essentials.     There  are  four  essentials  to  a  contract : 

1.  Mutual  assent  to  the  terms  of  the  agreement. 

2.  Competent  parties. 

3.  A  valid  consideration,  actual  or  presumed. 

4.  Definite  and  lawful  subject  matter  to  be  acted  upon. 
If  any  of  these  four  essentials  is  lacking  there  is  no  contract. 

AGREEMENT 

Agreement.  The  parties  to  a  contract  must  agree ;  there  must  be  an 
agreement  to  the  same  definite  thing  which  creates  the  obligation.  When 
the  contract  is  in  writing,  the  agreement  is  to  the  thing  written,  and  when 

3-1 


3-2  CONTRACTS 

this  is  signed  by  both  parties  the  evidence  of  the  agreement  is  definite  if 
intelligently  expressed.  But  an  oral  agreement  is  no  less  completely  a 
contract  in  fact.  Memory  of  the  terms  may  fail  or  there  may  be  a  wilful 
denial  of  these  terms  by  one  of  the  parties ;  the  enforcement  of  the  contract 
may  thus  be  difficult  or  impossible  because  the  evidence  is  insufficient  or 
inharmonious.  In  important  matters  a  written  contract,  signed  by  both 
parties,  is  clearly  desirable.  In  certain  cases,  to  appear  later,  writing  is 
required  by  the  Statute  of  Frauds. 

Proof.  Adequate  proof  of  any  contract  should  be  secured  in  those 
cases  where  a  single  writing  signed  by  both  parties  is  burdensome  or  out  of 
the  question.  If  a  dealer  offers  to  sell  me  4000  bricks  at  $5  per  thousand, 
and  I  accept  his  offer,  the  contract  is  made.  No  writing  is  necessary,  but 
one  is  desirable.  A  letter  or  order  from  me  to  him  fixes  the  terms,  and  his 
delivery  shows  his  acceptance.  The  evidence  is  sufficient  if  there  are  wit- 
nesses to  the  delivery. 

Offer  and  Acceptance.  An  offer  made  must  be  accepted  without  quali- 
fication or  there  is  no  contract.  Acceptance  must  be  absolute  and  identical 
with  the  terms  of  the  offer ;  the  offer  and  acceptance  must  be  definite  and 
certain.  If  a  man  offers  to  sell  me  a  steam  pump  and  I  agree  to  take 
it  provided  it  is  as  good  a  pump  as  the  one  furnished  Smith,  there  is 
no  contract  and  I  cannot  enforce  the  sale.  If,  however,  he  delivers  the 
pump  on  the  strength  of  my  letter  of  acceptance,  by  that  act  he  has 
accepted  my  qualifications  and  the  original  offer,  as  qualified,  has  become 
a  contract. 

An  offer  generally  holds  good  for  a  reasonable  time,  but  may  be  revoked 
at  any  time  before  acceptance.  The  reasonable  time  for  which  an  offer 
holds  good  will  differ  for  different  contracts.  Where  an  offer  is  sent  by  mail 
or  telegram,  the  contract  is  made  when  the  letter  of  acceptance  is  mailed 
in  the  post  office  or  post  box,  or  the  telegram  sent,  even  though  a  letter  of 
revocation  in  the  meantime  has  been  mailed  but  has  not  reached  its  desti- 
nation. The  letter  of  offer  and  the  letter  of  acceptance  together  constitute 
a  valid  contract.  A  copy  of  the  letter  of  offer  or  acceptance  should  be 
retained,  in  case  the  other  party  fails  or  refuses  to  produce  the  original  letter 
at  the  trial,  if  there  should  be  one.  As  has  been  suggested,  the  acceptance 
may  be  by  conduct,  by  acts,  as  well  as  by  words  (oral  or  written).  Per- 
formance constitutes  acceptance  of  an  offer  and  its  terms. 

Implied  Contract.  When  a  person  orders  an  article  sent  him  and  no  price 
is  specified,  although  he  does  not  specifically  agree  to  pay,  the  law  cures  this 
lack,  and  supplies  the  presumption  that  he  agreed  to  pay.  The  sum  to  be 
paid  will  be  a  reasonable  price.  The  careful  man,  except  in  minor  trans- 
actions, will  take  care  to  have  and  preserve  proper  evidence  of  the  contract 
or  transaction,  and  to  have  the  terms  clear  and  direct. 


CONTRACTS  3—3 

Mistake.  The  agreement  must  be  by  both  parties  to  the  same  thing. 
A  mistake  may  prevent  such  an  agreement.  A  mistake  as  to  fact  will 
make  a  contract  null ;  a  mistake  as  to  the  law  will  not  because  every  one 
is  assumed  to  know  the  law. 

Mistakes  of  fact  may  be  of  several  kinds : 

Mistake  as  to  Contract.  Mistake  as  to  the  nature  of  the  contract. 
As  an  example :  If  a  blind  or  illiterate  man  has  a  paper  incorrectly  read  to 
him,  it  purporting  to  be  a  mortgage,  while  it  is  in  reality  a  warranty  deed, 
he  has  not  agreed  to  the  paper  which  he  signed,  and  this  is  void  as  a  contract. 
It  is  important  that  the  mistake  shall  not  be  the  result  of  his  own  careless- 
ness or  negligence. 

Mistake  as  to  Person.  Mistake  as  to  the  person  contracted  with. 
Mr.  Potter  became  dissatisfied  with  the  Boston  Ice  Company  and  termi- 
nated his  contract  with  it,  and  contracted  with  the  Citizens'  Ice  Company ; 
this  company  later  sold  out  to  the  Boston  Ice  Company,  which  con- 
tinued the  delivery  of  ice  to  Potter,  who  afterwards  learned  the  facts  and 
refused  to  pay  for  the  ice.  The  courts  sustained  Potter.  There  was  a 
mistake  as  to  the  party,  and  no  contract.  When  a  person  receives  goods 
and  it  is  clear  that  he  cares  not  who  furnishes  them,  he  may  be  required 
to  pay  on  an  implied  promise  for  goods  received,  but  certainly  not  where 
he  relies  on  his  contract  with  one  party  rather  than  another. 

Mistake  as  to  Existence.  Mistake  as  to  the  existence  of  the  thing 
contracted  for.  In  one  case  a  lumber  dealer  agreed  to  buy  a  tract  of  timber 
land  and  both  parties  assumed  that  the  timber  was  standing.  The  standing 
timber  was  evidently  the  essence  of  the  contract.  It  was  later  found  that 
the  timber  had  already  been  cut  off.  There  existed  a  mistake  of  fact  and 
the  contract  was  void. 

Mistake  as  to  Identity.  Mistake  as  to  the  identity  of  the  thing  con- 
tracted for.  If  I  lay  my  hand  on  a  barrel  and  say  to  the  dealer :  "  Send 
me  this  barrel  of  cement  and  I  will  pay  you  $1.50,"  and  the  barrel  is  in  fact 
a  barrel  of  lime,  there  is  no  contract ;  he  can  not  force  me  to  accept  the 
barrel.  He  agreed  to  sell  me  that  particular  barrel;  I  agreed  to  buy  a 
barrel  of  cement ;  there  has  been  no  agreement  to  the  same  thing,  no  con- 
tract because  there  is  a  mistake  as  to  the  matter  of  the  contract. 

Mistake  in  Expression.  Where  there  has  been  a  clear  mistake  in  expres- 
sion in  a  contract,  the  courts  will  find  some  means  to  correct  the  contract 
so  as  to  cover  the  evident  intent.  This  may  be  done  in  a  court  of  Equity 
to  be  described  later. 

Effect  of  Fraud.  Fraud  will  render  a  contract  voidable  at  the  election 
of  the  defrauded  party.  It  is  essential  to  fraud  that  there  should  be  a  mis- 
statement  of  fact,  an  intent  to  deceive,  and  that  the  innocent  party  was 
misled  to  his  injury.  The  law  imposes  an  obligation  not  to  practice  fraud 


3-4  CONTRACTS 

or  deceit  and  will  not  assist  one  who  violates  his  obligations  hi  this  way ; 
therefore  a  contract  procured  by  fraud  will  not  be  enforced  for  the  benefit 
of  the  party  perpetrating  the  fraud.  Fraud  will  receive  special  attention 
hi  the  next  chapter,  on  torts. 

Misrepresentation.  With  relation  to  misrepresentation  made  unwit- 
tingly, the  textbooks  on  law  show  some  divergence  of  opinion.  In  accord- 
dance  with  principle  it  is  commonly  stated  to  be  the  law  that  misrepresenta- 
tions (without  fraud)  if  made  in  negotiations  preliminary  to  the  contract, 
perhaps  as  inducement  to  it,  will  not  suffice  to  upset  a  completed  contract. 
A  misrepresentation  that  enters  into  and  becomes  a  part  of  the  contract, 
if  material,  may  render  it  void,  possibly  on  the  ground  of  mistake ;  more 
probably  it  will  create  a  liability  for  damages.  If  a  plan,  which  is  made  a 
part  of  a  contract,  innocently  misrepresents  facts  and  the  price  bid  is  based 
on  the  plan,  this  misrepresentation,  if  material  and  serious,  may  render  the 
party  at  fault  liable  for  damages. 

Exceptions.  There  are  several  apparent  exceptions  with  relation  to 
representations  not  a  part  of  the  contract :  1.  In  marine  and  life  assurance, 
the  company  must  rely  upon  the  statements  of  the  insured  and  is  protected 
not  only  against  misrepresentations  but  against  failure  to  reveal  all  essential 
facts.  2.  Similarly,  a  wrong  description  of  lands  or  the  terms  or  conditions 
to  which  they  are  subject  will  vitiate  the  contract,  and  this  is  of  interest 
to  engineers.  3.  Contracts  for  the  sale  of  shares  in  corporations  are  in  the 
same  class.  4.  In  cases  where  fiduciary  relations  exist  between  the  parties, 
good  faith  is  so  strongly  insisted  on  that  misrepresentation  or  failure  to 
reveal  all  essential  facts  is  fatal  to  the  contract. 

Engineer's  Misrepresentation.  Contracts  for  engineering  construction 
commonly  contain  a  provision  that  "  the  decision  of  the  engineer  shall  be 
final  "  and  clothe  him  with  great  powers,  part  of  his  duties  being  essentially 
those  of  an  arbitrator.  The  courts  are  likely  to  hold  that  his  position  gives 
him  a  fiduciary  character  such  that  misrepresentations  on  his  part  take  on 
the  character  of  constructive  fraud,  and  impose  liability  upon  his  client 
because  the  engineer  is  his  agent. 

Voluntary  Agreement.  The  agreement  must  also  be  voluntary;  if 
made  under  compulsion  or  duress,  there  can  be  no  binding  agreement. 
Imprisonment  of  a  party  to  the  contract  made  either  unlawfully  or  through 
abuse  of  legal  process  constitutes  duress  and  renders  the  agreement  void- 
able by  the  party  under  duress.  There  are  other  forms  of  duress  such  as 
the  imprisonment  of  husband,  wife,  or  child,  or  any  near  relative ;  bodily 
harm  to  the  party  or  a  relative;  an  unlawful  seizure  or  destruction  of 
the  property  of  the  party  to  the  contract ;  and  threats  may  be  sufficient 
to  make  the  contract  voidable  on  the  score  of  duress.  These  cases  may  not 
be  of  great  interest  to  engineers,  but  set  out  an  important  principle. 


CONTRACTS  3-5 

Undue  Influence.  Undue  influence  will  also  vitiate  a  contract  if  it  be 
exercised  by  a  parent  or  anyone  having  special  fiduciary  or  confidential 
relations,  and  the  same  is  true  where  the  party  unduly  influenced  is  men- 
tally weak.  Guardian  and  ward,  attorney  and  client,  principal  and  agent, 
physician  and  patient  have  been  considered  to  hold  such  relations.  Such 
undue  influence  prevents  the  agreement  from  being  voluntary. 

PARTIES 

Parties.  There  must  be  at  least  two  parties  to  a  contract.  A  man  may 
not  contract  with  himself,  even  in  a  case  where  he  is  acting  on  one  side  for 
himself,  and  on  the  other  side  as  the  agent  for  some  one  else. 

Competency.  The  parties  must  be  legally  capable  of  making  a  con- 
tract. Persons  of  unsound  mind  are  incapable  of  making  an  agreement, 
and  so  incompetent  to  enter  into  a  contract ;  similarly,  a  minor,  or  person 
under  twenty-one  years  of  age,  is  held  to  be  incapable,  no  matter  how 
intelligent.  Persons  suffering  from  the  infirmities  of  age  or  sickness 
sometimes  have  their  affairs  managed  by  a  conservator  appointed  by  the 
court,  so  that  contracts  in  their  interest  may  be  made.  A  drunken  person, 
depending  somewhat  upon  how  drunk,  may  be  sufficiently  wanting  in 
understanding  to  be  incapable,  but,  in  general,  ordinary  drunkenness  will 
not  suffice  to  vitiate  a  contract. 

Married  Women.  Formerly,  married  women  could  not  contract,  but 
in  most  States  this  has  been  changed  by  statute.  When  a  contract  of  im- 
portance is  to  be  made  with  a  married  woman,  it  is  the  part  of  wisdom  to 
consult  a  lawyer  so  that  the  contract  may  be  effective  under  the  laws  of  the 
State  where  the  contract  is  made.  The  fact  that  women  transacting  busi- 
ness have  oftentimes  had  little  training  in  business  principles,  renders  a 
contract  with  a  woman  more  liable  to  misunderstanding,  and  for  that 
reason  more  care  should  be  used  in  making  it. 

Minors.  A  minor  may  contract  for  necessaries,  and  there  are  other 
cases  where  a  contract  clearly  in  his  favor  will  be  enforced.  A  contract 
with  a  minor  has  the  disadvantage  that  the  minor  is  not  bound  but  may 
hold  the  other  party  if  he  so  desires.  Contracts  are  sometimes  void,  that 
is  enforceable  against  neither  party;  sometimes  they  are  only  voidable, 
that  is  enforceable  at  the  option  of  one  of  the  parties  and  not  of  the  other. 
The  contract  with  the  minor  is  voidable,  rather  than  void ;  in  the  case  of 
some  contracts  the  minor  may  act  when  he  becomes  of  age,  and  ratify  the 
contract  if  he  sees  fit.  The  case  of  the  minor  is  abnormal  since  one  party 
is  held  to  the  contract  while  the  other  is  not. 

Minor's  Services.  The  father  is  entitled  to  the  services  of  a  minor,  and 
the  engineer  who  employs  him  should  in  strictness  make  a  contract  with 
the  father,  and  make  payments  to  the  latter.  This  is  often  burdensome ; 


3_6  CONTRACTS 

when  a  minor  is  employed  and  payment  is  made  to  him  for  a  time  and  his 
father  makes  no  objection,  the  courts  will  uphold  this  arrangement,  but 
not  when  the  father  gives  notice  of  objecting. 

Curiously  enough,  the  minor  has  insufficient  understanding  to  contract 
for  himself,  but  as  agent  for  another  he  may  legally  agree  and  make  or  sign 
a  contract.  The  law  protects  the  minor;  the  principal  who  employs  a 
minor  as  agent  is  capable  of  protecting  himself.  If  the  agency  is  important 
and  needs  to  be  defined  by  a  writing,  any  contract  for  the  agency  would 
properly  be  made  with  his  father,  as  the  minor  may  not  make  this  contract 
for  himself. 

Corporations.  A  corporation,  which  may  be  regarded  as  an  artificial 
person,  may  be,  and  in  fact  often  is,  one  of  the  parties  to  a  contract.  The 
contract  must  be  signed  in  its  behalf,  and  in  its  name,  by  one  of  its  officers 
or  agents,  properly  authorized.  It  is  important  that  anyone  either  accept- 
ing the  signature,  or  signing  himself  for  the  corporation,  should  have  suffi- 
cient assurance  that  the  authority  is  legally  and  completely  exercised ;  any 
one  dealing  with  the  corporation  should  know  that  the  party  signing  for  the 
corporation  has  authority  to  do  so. 

An  engineer  is  often  an  employee  or  agent  of  a  corporation  of  some  sort  ; 
his  representative  character  is  such,  his  dealings  with  the  agents  of  others 
so  common,  that  special  attention  will  be  given  in  later  chapters  to  cor- 
porations, and  to  agency.  A  special  chapter  will  deal  with  the  relations 
of  engineers  to  others. 

CONSIDERATION 

Consideration  Defined.  Consideration  has  been  defined  as  something 
done,  forborne,  or  suffered,  or  promised  to  be  done,  forborne,  or  suffered, 
by  the  promisor,  in  exchange  for  the  promise.  It  may  be  a  benefit  to 
the  promisor,  or  it  may  be  a  detriment  to  the  promisee  which  gives  it  the 
quality  of  consideration.  It  must  be  lawful  and  it  must  be  certain.  If 
either  illegal  or  impossible  in  itself,  it  is  insufficient.  -It  must  in  general 
be  a  present  or  future  benefit  or  detriment ;  a  past,  completed  transaction 
will  not  serve  as  consideration  for  a  present  promise.  This  means  some- 
thing past  or  done  without  connection  with  the  performance  of  a  contract. 
A  sum  of  money  paid  at  the  time  of  the  contract  or  even  the  day  before 
for  the  purpose  of  obtaining  the  promise  or  contract  would  be  a  valid  con- 
sideration. This  is  sometimes  called  an  executed  consideration,  rather 
than  executory  which  contemplates  future  action.  A  promise  to  do  some- 
thing already  required  by  law  or  by  public  duty,  however,  will  not  serve 
as  consideration.  Forbearance,  such  as  an  agreement  for  the  payment  of 
additional  money,  or  the  compromise  of  a  disputed  claim  is  a  valid  considera- 
tion for  a  new  promise  to  do  something  or  to  pay  something. 


CONTRACTS  3-7 

Valid  Consideration  —  Seal.  There  must  be  a  valid  consideration.  A 
simple  promise  without  consideration  is  not  enforceable  at  common  law. 
An  apparent  exception  is  that  a  written  contract  under  seal  need  not  have 
any  consideration  expressed.  It  is  said  that  the  seal  imports  a  considera- 
tion. A  plausible  reason  for  this  exception  is  necessity ;  in  the  case  of  cer- 
tain writings  in  the  nature  of  contracts  there  is  no  natural  reason  for  any 
actual  consideration.  For  example,  some  friend  of  a  contractor  joins  him 
in  a  bond  for  the  faithful  performance  of  the  contract;  this  friend  has 
nothing  to  gain,  no  consideration  for  his  promise,  but  the  transaction  is  a 
common  and  a  necessary  one ;  affixing  the  seal  is  an  act  of  some  solemnity, 
and  the  law  finds  that  the  seal  cures  the  defect.  Necessity  may  not  have 
been  the  primary  cause  of  this  legal  rule  or  usage,  but  may  now  be  con- 
sidered a  fair  explanation  of  its  survival  and  present  existence.  In  some 
States  there  is  a  statutory  provision  that  any  contract  put  in  writing  is 
presumed  to  be  founded  on  a  consideration. 

Seal  and  Scroll.  A  seal  is  a  piece  of  wax  or  adhesive  paper  attached  to 
the  writing.  In  some  States  a  scroll  (or  scrawl)  with  the  word  "  seal  " 
inclosed  is  a  lawful  seal ;  in  many  others  it  is  not.  Unless  it  is  known  that 
the  scroll  is  legal,  no  chances  should  be  taken,  a  seal  should  be  used ;  half 
a  postage  stamp  is  a  good  seal  in  case  of  necessity. 

Desirability  of  Seal.  The  question  may  arise,  if  a  seal  does  away  with 
the  necessity  for  consideration,  why  not  make  all  contracts  in  this  way? 
One  answer  is  that  contracts  are  often  made  through  offer  and  acceptance, 
or  in  some  informal  way.  Another  answer  is  that  in  case  of  a  suit  at  law  a 
contract  or  document  under  seal  requires  greater  completeness  of  evidence 
in  some  formalities  and  in  this  way  is  disadvantageous.  Moreover,  the 
seal  does  not  cure  all  defects ;  it  is  true  of  sealed  instruments  that  in  some 
cases  reliance  is  placed  upon  a  consideration  expressed,  in  other  cases,  upon 
the  seal  alone.  In  the  former  case,  if  the  consideration  is  found  to  be  illegal 
or  in  any  way  fails,  the  contract  may  be  void  in  consequence,  for  failure  of 
consideration,  even  though  under  seal.  Where  dependence  is  clearly  upon 
the  seal,  the  seal  alone  is  sufficient. 

Mutual  Promises.  Most  contracts  call  for  the  furnishing  of  goods  or 
labor  or  both,  on  one  side,  and  the  payment  of  money  on  the  other ;  these 
contracts  are  in  the  ordinary  course  of  business;  but  contracts  often 
consist  of  mutual  promises,  in  which  case  each  promise  serves  as  considera- 
tion for  the  other.  Each  promise  must  be  such  as  to  be  enforceable ;  if  a 
man  is  so  keen  that  he  has  made  a  contract  in  which  the  other  makes  real 
promises  while  he  makes  what  are  in  form  promises  but  which  can  not  be 
enforced,  he  has  overreached  and  there  is  no  contract.  It  is  held  that 
mutual  promises  to  subscribe  to  some  beneficial  object  are  enforceable 
although  the  consideration  does  not  appear. 


3-8  CONTRACTS 

Inadequacy  of  Consideration.  Inadequacy  of  consideration  does  not 
vitiate  a  contract ;  but  it  may  serve  sometimes  as  evidence  of  fraud  in  pro- 
curing the  contract,  or  of  duress,  or  of  undue  influence,  or  mistake.  The 
consideration  need  not  appear  adequate,  but  must  have  some  value,  real 
or  theoretical. 

Failure  of  Consideration.  Failure  of  consideration  results  when  from 
any  cause  the  consideration,  once  good,  becomes  incapable  of  being  done  or 
furnished,  and  it  renders  the  contract  void.  Bankruptcy  of  a  contractor 
would  release  the  private  party  or  corporation  which  contracted  with  him, 
although  action  in  this  matter  might  more  often  be  taken  on  the  basis  of  a 
breach  of  contract. 

Reasonable  Consideration  Implied.  It  will  be  understood  that  often, 
while  no  consideration  is  expressed  when  goods  are  ordered  or  labor  is  hired, 
the  law  supplies  the  consideration  that  payment  will  be  made,  the  amount 
to  be  a  reasonable  price,  commonly  the  market  price. 

Negotiable  Instruments.  The  laws  dealing  with  negotiable  instruments 
(bills  of  exchange,  notes,  and  checks)  are  peculiar,  especially  touching  the 
question  of  consideration  which  in  these  writings  need  not  always  be 
expressed.  A  later  chapter  deals  with  this  subject. 

SUBJECT  MATTER 

Lawful  Acts.  The  agreement  must  be  for  the  performance  of  some 
lawful  act,  or  for  the  lawful  abstaining  from  doing  some  specified  act. 
The  object  of  a  contract  must  be  lawful,  both  with  reference  to  the  Common 
Law  and  to  statutory  regulations.  Engineers  in  their  business  have 
naturally  nothing  to  do  with  wagers,  which  are  unlawful ;  the  buying  or 
selling  of  stock  on  margins  is  practically  a  wager  in  cases  where  no  stock  in 
fact  is  transferred.  Similarly,  usury  or  contracting  for  interest  on  money 
at  more  than  the  legal  rate  is  unlawful. 

Licenses.  Professional  and  commercial  regulations  often  require  li- 
censes or  prescribe  restrictions.  Doctors  of  medicine  must  be  licensed; 
certain  mechanics,  gas  fitters  in  some  cities,  must  be  licensed,  and  a  contract 
with  an  unlicensed  workman  for  personal  services  in  his  trade  would  be  void. 
The  formal  surveys  of  mines  for  filing  claims  must  be  made  by  duly  qualified 
Deputy  United  States  Mineral  Surveyors. 

Sunday  Laws.  Of  importance  to  engineers  are  the  Sunday  laws. 
Work  on  Sunday  is  forbidden  by  statute  in  most  States.  Frequently, 
work  on  Sunday  seems  necessary  in  the  public  interest,  and  works  of  neces- 
sity and  charity  may  be  legally  done  on  Sunday.  In  a  rapid  transit  sub- 
way the  deepening  of  the  foundations  of  a  very  high  building,  entered  upon 
during  the  week,  was  continued  over  Sunday ;  continuous  work  seemed 


CONTRACTS  3-9 

necessary  to  secure  safety,  and  this  was  in  the  public  interest  and  the 
courts  upheld  it.  If  the  work  of  repairing  a  railroad  is  of  such  character  that 
it  cannot  be  done  on  a  week  day  without  incommoding  the  public,  it  is  a 
work  of  necessity.  If  necessarily  done  on  Sunday  to  preserve  life,  health, 
or  property,  it  is  again  a  work  of  necessity.  But  mere  convenience  or 
economy  of  Sunday  over  week-day  work  will  not  justify  it.  Provision  is 
frequently  made  by  statute  that  certain  other  work  may  be  done  on  Sun- 
day, for  example  certain  trains  may  be  run,  certain  shops  opened,  papers 
sold. 

Common  Law  Illegality.  Under  the  Common  Law,  any  contract  promo- 
tive  of  crime,  sexual  immorality,  or  of  torts  is  unlawful,  being  against 
public  interest;  the  same  is  true  of  a  contract  in  restraint  of  marriage. 
It  is  not  important  to  include  here  all  cases  of  common  law  illegality. 
Contracts  derogatory  to  public  justice,  or  limiting  legal  rights,  or  com- 
mercial freedom  are  of  interest  here.  Certain  agreements  tending  to 
encourage  litigation  are  unlawful.  As  an  example,  a  lawyer  may  not  encour- 
age litigation  by  taking  cases  on  contingent  fees ;  he  cannot  legally  agree 
to  prosecute  a  suit  for  one  fourth  part  of  the  money  secured;  that 
seems  unprofessional  and  is  prohibited  by  law ;  this,  however,  is  a  provision 
of  law  which  is  easily  avoided  by  a  slight  change  in  the  form  of  the  agree- 
ment,- and  is  less  effective  than  is  desirable. 

Contrary  to  Public  Policy.  The  general  attitude  of  the  courts  is  not  to 
encourage  litigation,  yet  in  some  cases  they  refuse  to  allow  persons  to  agree 
not  to  utilize  the  courts  for  the  settlement  of  their  disagreements,  believing 
it  contrary  to  public  policy  that  these  persons  should  part  with  their  legal 
rights.  For  instance  a  passenger  on  a  railroad  train  is  entitled  to  safe 
passage,  and  an  agreement  to  release  the  company  from  liability,  even  when 
made  in  writing,  does  not  exempt  the  company  from  paying  damages  for 
injuries  resulting  from  gross  negligence  on  its  part,  even  though  the  person 
was  riding  on  a  free  pass.  There  is  a  general  duty  to  the  public  involved, 
and  the  individual  cannot  waive  this. 

Restraint  of  Trade.  An  important  class  of  contracts  against  public 
policy  in  limiting  commercial  freedom  includes  those  tending  to  monopoly 
through  combination,  and  those  in  unreasonable  restraint  of  trade.  In 
recent  years,  no  question  of  law  or  public  policy  has  been  more  prominent 
than  both  the  work  of  the  courts  and  the  action  of  legislative  bodies  touch- 
ing the  regulation  of  combinations  tending  toward  monopoly  or  to  limit 
freedom  of  trade ;  statutory  regulations  must  be  looked  to  as  well  as  the 
Common  Law,  and  these  are  sure  to  be  in  a  state  of  change  for  several  years 
to  come.  But  while  statutory  provisions  may  in  many  cases  control,  one 
should  never  lose  sight  of  the  broad  Common  Law  point  of  view,  the 
illegality  of  all  contracts  in  unreasonable  restraint  of  trade. 


3-10  CONTRACTS 

Withdrawal  of  Competition.  Under  the  Common  Law,  an  agreement 
for  the  complete  withdrawal  of  competition  is  contrary  to  public  policy  and 
void.  A  man  may  not  agree  to  discontinue  the  manufacture  of  water  pipes ; 
he  may  agree  to  withdraw  from  business  for  a  definite  time  or  within  a 
restricted  area,  provided  the  time  or  area  is  not  too  great.  In  some  States 
it  has  been  held  that  an  entire  State  is  too  wide  an  exclusion,  contrary  to 
the  policy  of  the  State ;  the  State  is  sovereign  and  "  the  State  "  covers  the 
entire  field  over  which  the  court  has  jurisdiction. 

Suppressing  Competition.  An  agreement  to  suppress  competition  at  a 
public  letting  of  work  is  illegal.  In  this  way  an  agreement  either  not  to 
bid,  or  to  bid  higher  than  another  (whose  bid  is  known),  are  alike  illegal. 
The  parties  to  such  a  transaction  are  liable  not  only  to  have  the  contract 
set  aside,  and  payment  under  the  contract  refused,  but  to  criminal  prosecu- 
tion as  well.  In  the  letting  of  engineering  contracts  there  has  often  been 
strong  suspicion  of  collusion  and  in  some  cases  direct  evidence  of  it,  with 
indictment  by  grand  jury  as  a  result. 

Innocent  Parties.  An  agreement,  unlawful  in  itself,  may  nevertheless 
be  sometimes  enforced  by  the  party  innocent  of  fault,  if  the  other  alone 
was  knowing  to  the  illegality.  An  agreement  illegal  in  part  may  sometimes 
be  enforced  in  part.  Where  part  of  the  consideration  is  lawful  and  part 
unlawful,  the  lawful  part  may  in  some  cases  be  sufficient  to  prevent  the 
entire  avoidance  of  the  contract  for  lack  of  consideration. 

Clearness.  An  important  feature  of  any  contract  is  that  it  shall  de- 
scribe what  is  to  be  done,  or  the  material  to  be  furnished,  with  sufficient 
clearness  and  sufficient  detail  to  result  in  securing  what  is  wanted.  This 
is  a  matter  of  business,  of  good  sense  rather  than  of  law;  it  requires  an 
understanding  of  the  English  language  and  of  the  business  in  hand;  it 
requires  a  properly  developed  imagination  so  as  to  cover  the  points  wherein 
the  contract  would  otherwise  fail  to  secure  the  results  desired.  Any  busi- 
ness man  who  knows  what  are  the  four  essentials  of  a  contract  should  be 
entirely  capable  of  writing  simple  contracts  in  the  ordinary  routine  of 
business  where  the  amounts  involved  are  not  large. 

Engineer's  Initiative  in  Writings.  In  very  important  contracts  the 
best  method  for  the  engineer  to  pursue  may  often  be  for  him  to  write  the 
contract  and  the  specifications,  exercising  what  skill  and  foresight  he 
deems  essential,  and  then  submit  them  to  a  suitable  legal  adviser  for  ap- 
proval or  comment  and  modification.  The  man  who  best  appreciates  the 
subject  matter  is  commonly  the  best  man  to  make  the  first  draft. 

Importance  of  Evidence.  It  may  be  appropriate  finally  to  suggest  that 
in  making  a  contract,  oral  or  written,  the  importance  of  evidence  should  be 
kept  in  mind ;  the  terms  of  the  contract  should  take  into  account  the 
means  of  securing  evidence  in  case  of  breach  of  contract  by  the  other  party. 


CONTRACTS  3-11 

A  later  chapter  will  deal  with  some  of  the  provisions  usually  found  in  con- 
tracts for  constructing  buildings  or  public  works,  or  for  the  erection  of 
structures  of  various  kinds. 

STATUTE   OF  FRAUDS 

Statute  of  Frauds.  While  most  contracts  are  preferably  in  writing, 
partly  to  secure  certainty  of  performance,  partly  from  the  standpoint  of 
evidence,  nevertheless,  an  oral  contract  is  in  general  sufficient.  In  the  case 
of  certain  contracts,  however,  it  is  provided  by  law  that  they  or  a  mem- 
orandum of  them  must  be  in  writing.  Under  an  old  English  statute  en- 
titled "  An  Act  for  the  Prevention  of  Frauds  and  Perjuries,"  written  evi- 
dence must  be  presented  in  order  to  enforce  certain  specified  classes  of 
contracts. 

Statement  of  English  Statute.  This  Act  is  commonly  known  and 
referred  to  as  the  "  Statute  of  Frauds."  The  reading  of  Section  4  of  the 
statute  is  as  follows : 

"No  action  shall  be. brought: 

1.  whereby  to  charge  any  executor  or  administrator  upon  any  special  promise 
to  answer  damages  out  of  his  own  estate ; 

2.  or  whereby  to  charge  the  defendant  upon  any  special  promise  to  answer  for 
the  debt,  default,  or  miscarriage  (misdoing)  of  another  person ; 

3.  or  to  charge  any  person  upon  any  agreement  made  in  consideration  of  mar- 
riage ; 

4.  or  upon  any  contract  or  sale  of  lands,  tenements,  or  hereditaments,  or  an 
interest  in  or  concerning  them ; 

5.  or  upon  any  agreement  that  is  not  to  be  performed  within  the  space  of  one 
year  from  the  making  thereof ; 

unless  the  agreement  upon  which  such  action  shall  be  brought,  or  some  memo- 
randum or  note  thereof  shall  be  in  writing,  and  signed  by  the  party  to  be  charged 
therewith,  or  some  other  person  thereunto  by  him  lawfully  authorized." 

This  statute  has  been  adopted  or  re-enacted  and  frequently  enlarged 
so  that  it  is  in  force  in  all  of  the  States  of  this  country  in  substantially  this 
form. 

It  is  further  provided  in  section  17  that 

"No  contract  for  the  sale  of  any  goods,  wares,  or  merchandise  for  the  price  of 
£10  sterling  or  upwards  shall  be  allowed  to  be  good,  except  the  buyer  shall  accept 
part  of  the  goods  so  sold,  and  actually  receive  the  same,  or  give  something  in  earnest 
to  bind  the  bargain,  or  in  part  payment,  or  that  some  note  or  memorandum  in 
writing  of  the  said  bargain  be  made  and  signed  by  the  parties  to  be  charged  by  such 
contract,  or  their  agents  thereunto  lawfully  authorized." 

This  section  also  has  been  re-enacted  and  has  become  the  law  in  many 
but  by  no  means  all  of  the  States,  and  where  in  force,  the  price  (instead  of 


3-12  CONTRACTS 

£10  sterling)  varies  in  different  states  from  $30  to  $2500 ;  an  amount  not 
uncommon  is  $500. 

GOODS,  WARES,   OR  MERCHANDISE 

Labor  and  Materials.  A  very  troublesome  question,  sometimes,  under 
this  Section  17,  is  to  determine  whether  a  contract  is  for  goods  in  completed 
form,  or  for  the  labor  and  materials  that  go  to  make  them  in  which  case 
writing  is  not  necessary.  An  order  to  a  manufacturer  is  sometimes  clearly 
for  labor  and  materials.  The  decisions  in  the  different  States  show  consider- 
able divergence  of  view,  and  a  later  chapter  on  sales  gives  some  attention 
to  this  matter. 

Contracts  Unenforceable.  With  relation  to  both  sections  of  the  Statute 
of  Frauds,  the  proper  view  to  take  is  that  they  do  not  declare  the  contract 
unlawful  or  void;  the  moral  obligation  is  in  no  degree  lessened  by  this 
statute ;  the  only  effect  is  to  withdraw  the  aid  of  the  courts  in  enforcing  a 
contract  specified  by  it  unless  made  in  writing ;  they  will  lend  no  aid  to 
compelling  its  fulfilment.  The  statute  is  in  the  interest  of  morality  and 
wise  public  policy,  and  further  serves  to  relieve  the  courts  of  much  un- 
desirable litigation. 

Obligation  of  Another.  Under  the  second  clause,  if  a  purchaser  is 
accompanied  by  a  friend,  and  the  friend  says  "  if  the  purchaser  does  not 
pay  you,  I  will,"  the  contract  is  unenforceable  unless  in  writing;  if  the 
friend  says  "  deliver  the  article  to  this  man  and  send  the  bill  to  me," 
it  is  his  own  debt  and  not  another's,  and  writing  is  not  required. 

Interest  in  Lands.  The  fourth  provision  touching  interest  in  lands,  is 
definitely  of  importance  to  engineers.  It  is  sometimes  difficult  to  deter- 
mine what  is  an  interest  in  land  under  the  statute.  Growing  crops  are 
"  goods,"  not  an  "  interest  in  land."  Standing  timber,  however,  is  part 
of  the  land  and  a  sale  would  require  writing.  A  sale  after  cutting  does  not 
involve  an  interest  in  the  land.  A  contract  to  cut  timber  from  the  land  and 
deliver  after  cutting  need  not  be  in  writing.  A  sale  of  the  timber  after 
cutting  might  require  a  writing  in  view  of  the  price  being  in  excess  of  $50 ; 
the  contract  to  cut  and  deliver  would  clearly  be  a  contract  for  labor  and 
materials.  How  easy  it  would  be,  however,  for  a  misunderstanding  to 
occur  from  lack  of  perfect  memory  as  to  the  form  in  which  the  agreement 
was  actually  made,  and  how  important  might  be  the  question  as  to  where 
the  burden  of  proof  rests ;  how  desirable,  therefore,  the  writing  is,  whether 
necessary  or  not  under  the  Statute  of  Frauds. 

Interest,  or  License,  or  Easement.  During  construction  a  contractor 
needs  to  use  private  lands  for  a  temporary  track,  or  for  the  diversion  of  a 
stream.  Does  the  permission  constitute  a  lease  or  an  easement  in  the  land 
and  require  a  writing ;  or  is  it  merely  a  license  or  permit  which  needs  no 


CONTRACTS  3-13 

writing?  A  permanent  diversion  of  the  stream  would  doubtless  require  a 
writing ;  the  use  of  a  temporary  construction  track  for  a  short  time  would 
not. 

Not  Within  a  Year.  The  fifth  provision  is  as  to  contracts  not  to  be  per- 
formed within  a  year.  To  come  within  this  statute  the  agreement  must 
be  such  in  its  terms  or  in  its  nature,  that  performance  within  the  year  is 
impossible.  A  contract  to  sell  your  services  for  a  year  from  next  Monday 
cannot  be  performed  in  a  year.  The  year  dates  from  the  making  the 
contract  and  not  from  the  time  of  entering  upon  the  work  or  the  duties 
required  by  the  contract. 

Kind  of  Writing.  As  to  the  nature  of  the  writing  in  these  cases,  it  need 
not  be  a  complete  contract ;  it  need  not,  according  to  the  statutes  in  most 
States,  have  the  consideration  expressed.  A  letter,  a  memorandum  of  any 
sort  is  sufficient,  if  it  shows  the  parties  to  the  agreement  (or  enables  them 
to  be  determined),  sets  forth  the  agreement  with  sufficient  certainty,  and 
is  signed  by  the  party  to  be  charged;  this  satisfies  the  Statute.  The 
signature  need  not  be  in  full ;  initials  will  serve,  or  an  unusual  signature 
(even  an  assumed  name)  provided  it  can  be  established  that  the  party 
wrote  it,  that  it  is  his  signature.  Even  printed  initials  on  the  back  of  an 
account  book  have  been  held  to  be  a  sufficient  signature. 

DISCHARGE  OF  CONTRACT 

Discharge.  A  contract  once  made  is  considered  to  remain  in  force 
until  discharged.  There  are  several  modes  of  terminating  or  discharging 
a  contract ;  1.  performance,  2.  breach,  3.  impossibility  of  performance, 
4.  agreement  or  consent,  5.  operation  of  law. 

Performance.  Performance  is  clearly  the  method  contemplated  in 
entering  upon  the  contract;  the  simplest  case  is  where  performance  is 
complete  on  both  sides.  In  some  cases  one  party  only  has  performed  his 
part,  and  in  that  case  he  only  is  discharged  from  further  obligation.  A 
modification  of  the  performance,  if  accepted,  is  sufficient,  and  a  substantial 
performance  made  in  good  faith  will  be  sufficient  in  spite  of  slight  and  trivial 
imperfections,  and  will  justify  the  enforcement  of  payment. 

Completion.  Whether  the  contract  has  been  completed  on  either  side 
is  what  is  called  a  mixed  question  of  law  and  fact.  What  any  agreement 
means  is  a  question  of  law  (for  the  judge) ;  what  are  the  facts  as  to  satis- 
fying that  agreement  is  for  the  jury ;  sometimes  under  undisputed  facts 
a  question  arises  as  to  the  legal  effect  of  these  facts,  and  this  is  for  the 
judge  to  decide. 

Money  Payment.  Often  a  money  payment  by  one  party  discharges 
that  party ;  if  payment  is  made  otherwise  than  by  cash,  the  question  may 


3-14  CONTRACTS 

arise  as  to  whether  a  check  or  draft  or  note  is  good,  and  whether  this  pay- 
ment satisfies  the  contract ;  a  check  may  be  good  if  cashed  to-day,  bad  if 
presented  to-morrow  after  the  bank  has  failed.  When  a  note  is  given  in 
payment,  there  may  be  a  question  of  fact  whether  the  contract  was  dis- 
charged by  the  payment  of  the  note,  or  whether  the  party  accepted  it  as  a 
new  obligation  or  contract  whose  performance  by  payment  would  then 
discharge  the  original  contract.  A  check  bad  at  the  time  issued  will  not 
discharge  the  man  who  drew  the  check.  It  may  be  worth  while  to  accept 
it  as  evidence  of  the  debt  even  if  there  is  some  suspicion  that  it  is  not  good, 
provided  nothing  better  can  be  secured  at  the  time. 

Tender.  In  some  cases  one  of  the  parties  refuses  to  accept  the  money 
payment  offered,  or  he  obstructs  the  performance  by  the  other  party  of 
his  contract  obligations.  The  second  party  is  thus  forced  to  make  a 
"  tender  "  of  the  money  or  of  his  services,  or  of  goods,  or  whatever  the  con- 
tract calls  for.  Tender  may  be  defined  as  attempted  performance.  Tender 
must  observe  exactly  the  terms  of  the  contract  as  to  time,  place,  and  mode 
of  payment.  Money  tender  must  be  in  legal  tender,  and  change  cannot 
be  insisted  upon,  nor  a  receipt  demanded ;  the  tender  must  be  uncon- 
ditional. 

Effect  of  Tender.  A  tender  of  goods,  of  services,  of  labor  and 
materials,  if  refused,  relieves  the  party  making  it  of  further  obligations, 
and  suffices  either  to  allow  him  to  prosecute  or  to  defend  the  suit,  as  the 
case  may  be ;  evidence  of  the  tender  is  of  course  essential.  The  tender 
of  money  does  not  release  a  debt  or  obligation,  but  does  secure  exemption 
from  paying  either  interest  or  costs  of  suit,  the  various  court  costs,  the 
latter  being  often  a  large  item  in  a  long  contested  suit,  which  is  true  also 
of  interest.  The  lawyer's  charges  are  not  a  part  of  the  cost  of  suit ;  each 
party  pays  his  own  lawyer. 

Reasonable  Time  for  Performance.  As  to  the  performance  of  a  con- 
tract other  than  by  money  payment,  a  reasonable  time  will  be  allowed 
unless  the  time  is  specified,  and  even  then,  unless  time  is  of  the  essence 
of  the  contract,  rigid  requirements  may  not  be  enforced.  In  a  later  chapter 
special  attention  will  be  given  to  the  question  of  liquidated  damages,  or 
penalty,  for  non-performance  as  to  time. 

Breach  of  Contract.  A  breach  of  contract  may  be  either  positive  or 
negative,  that  is  by  repudiation  or  by  failure.  The  repudiation  or  renuncia- 
tion must  be  unequivocal  and  absolute,  and  must  be  acted  upon  by  the  other 
party,  in  which  case  the  breach  is  complete  and  releases  the  innocent  party 
from  further  performance.  The  repudiation  must  affect  the  entire  per- 
formance, or  the  essential  features  of  the  contract.  Any  positive  act  which 
renders  performance  impossible  by  the  other  party  to  the  contract  has  the 
general  character  of  repudiation. 


CONTRACTS  3-15 

Failure  from  Negligence.  The  breach  may  be,  however,  in  the  nature 
of  a  failure,  the  result  of  negligence  or  incompetence.  The  case  here  is 
less  simple ;  sometimes  the  effect  is  to  release  the  innocent  party ;  some- 
times it  simply  gives  him  the  right  to  sue  for  damages  after  performance  of 
his  own  part  of  the  agreement.  Through  the  action  of  law,  bankruptcy 
of  one  of  the  parties  is  equivalent  to  a  breach,  and  allows  the  other  party 
to  cancel  the  contract. 

Impossibility.  Impossibility  of  performance,  which  may  serve  as  a  dis- 
charge, may  proceed  from  the  act  of  the  other  party ;  if  this  be  intentional, 
directly  or  by  implication,  it  is  a  breach  of  contract.  If  the  impossibility 
results  without  the  fault  of  one  party  and  through  some  failure  or  neglect 
of  the  second  party,  not  deliberate,  not  intentional,  nevertheless  it  will  act 
as  a  discharge.  Similarly,  if  impossible  of  lawful  performance,  whether 
through  later  legislation  or  a  change  in  conditions  affecting  the  legal  status, 
as  through  some  judgment  of  a  court  affecting  the  parties  or  the  subject 
matter,  this  serves  as  a  discharge. 

If  a  thing  essential  to  the  performance  (the  subject  matter)  has  ceased 
to  exist,  even  though  neither  party  is  at  fault,  an  impossibility  is  again 
created.  When  services  are  definitely  personal,  the  death  of  the  person 
renders  the  contract  impossible,  and  frequently  sickness  or  disability  will 
work  the  same  result. 

Discharge  by  Agreement.  A  contract  may  be  discharged  by  agreement 
between  the  parties.  Sometimes  a  provision  contemplating  this  contin- 
gency is  made  a  part  of  the  original  contract.  Sometimes  a  new  contract 
is  made  which  by  its  terms  supersedes  the  old.  Sometimes  the  contract  is 
set  aside  by  a  direct  agreement  that  it  shall  cease  to  bind  either.  Sometimes 
a  new  contract  is  substituted  for  the  old,  or  a  modification  of  its  terms  is 
agreed  upon. 

New  Agreements.  Whenever  an  additional  agreement  of  any  sort  is 
entered  into,  great  care  should  be  exercised  that  such  new  agreement  does 
not  fail  for  lack  of  consideration.  An  agreement  to  receive  less  in  payment 
than  the  contract  specified,  is  void  because  without  consideration ;  so  is  an 
agreement  to  receive  an  inferior  quality  of  work  or  of  goods.  However, 
if  less  money,  or  a  different  quality  of  goods  or  work  has  already  been 
accepted,  it  will  not  render  the  contract  void. 

Sometimes  provision  is  made  in  the  contract  that  the  contract  shall 
cease  to  remain  in  force  if,  or  whenever,  one  of  the  parties  shall  do  a  certain 
specified  act,  or  shall  fail  to  do  some  act,  or  on  the  occurrence  of  an  event,  or 
even  at  the  option  of  one  of  the  parties,  provided  that  the  option  be  not  so 
sweeping  as  to  make  the  contract  altogether  unenforceable  against  the  other. 

Discharge  in  Writing.  It  is  evident  that  it  is  wise  to  have  a  written 
agreement  if  a  contract  in  writing  is  to  be  discharged ;  the  evidence  should 


3-16  CONTRACTS 

be  clear.  A  contract,  even  under  seal,  however,  has  been  set  aside  by  a  later 
oral  agreement  to  do  so,  when  the  oral  agreement  has  already  been  executed. 
Nevertheless,  when  any  contract  is  to  be  discharged  by  a  new  contract  or 
agreement,  the  latter  ought  to  be  of  equal  dignity  with  the  original. 

The  careful  engineer  will  see  to  it  that  any  supplementary  agreements 
are  clear,  that  proper  evidence  of  them  exists,  and  that  such  agreements 
are  in  all  respects  valid  and  legal. 


REMEDIES 

Remedies  for  Breach.  For  a  breach  of  contract  there  may  be  several 
remedies.  Sometimes  the  breach  operates  as  a  discharge  of  the  innocent 
party,  and  this  is  sufficient.  Often  money  damages  to  the  party  injured, 
are  the  remedy  to  be  pursued  in  a  suit  at  law.  Sometimes  neither  of  these 
remedies  is  sufficient,  and  a  suit  in  Equity  is  brought  to  secure  specific  per- 
formance of  the  contract.  A  later  chapter  will  be  devoted  to  Equity. 


CHAPTER  IV 
TORTS 

Law  of  Torts.  The  principle  underlying  the  law  of  torts  has  been  well 
stated  by  Judge  Cooley : 

"  The  maximum  benefit  of  which  government  is  capable  is  attained  when  indi- 
vidual rights  are  clearly  and  justly  defined  by  impartial  laws,  which  impose  upon 
no  one  any  greater  restraint  than  is  essential  for  securing  equivalent  rights  to  all 
persons,  and  which  furnish  for  the  rights  of  all  an  adequate  and  equal  protection." 

Therefore  the  rights  of  one  can  be  secured  only  by  imposing  upon  others 
the  duty  to  observe  those  rights.     So  it  has  been  said  : 

"  Every  right  is  accompanied  by  a  duty." 

Sometimes  the  duty  is  more  evident,  but  sometimes  the  right.     A  some- 
what similar  point  of  view  is  that : 

"  The  Common  Law  is  generally  said  to  consist  in  the  established  usages  of  the 
people,  by  which  their  respective  rights  are  recognized  and  limited,  and  to  which 
they  are  expected  to  conform  in  their  dealings." 

Definition.     More  specifically  a  tort  may  be  defined  as  : 

"An  act  or  omission  which  unlawfully  violates  a  person's  right  created  by  law, 
and  for  which  the  appropriate  remedy  is  a  Common  Law  action  for  damages  by 
the  injured  person." 

The  right  must  not  be  one  conferred  directly  by  the  terms  of  a  contract ; 
that  is  taken  care  of  under  the  law  of  contracts. 

Crimes  and  Torts.  It  is  further  true  that  certain  violations  of  the 
rights  of  others  are  classed  as  crimes.  It  is  a  fact  that  crimes  and  mis- 
demeanors on  the  one  hand,  and  torts  on  the  other,  are  both  offenses 
against  the  rights  of  others.  There  is  this  distinction,  that  a  tort  is  an 
offense  against  an  individual  for  which  the  individual  should  receive 
redress,  while  a  crime  or  misdemeanor  is  an  offense  which  affects  the 
general  community  and  which  the  public  interest  demands  should  be 
punished. 

4-1 


4-2  TORTS 

Classification  of  Torts.  Efforts  to  systematize  and  classify  torts  have 
been  somewhat  unsatisfactory.  It  is  sufficient  for  present  purposes  to 
state  that  while  the  Common  Law  does  not  attempt  to  right  all  wrongs, 
nevertheless  it  has  from  time  to  time  recognized  certain  rights  whose  vio- 
lation constitutes  a  breach  of  duty  of  a  sort  which  may  be  designated  a 
tort,  for  which  a  suit  of  damages  may  be  maintained ;  and  attention 
will  be  called  to  a  number  of  torts  of  special  interest  to  engineers. 

Ways  in  which  Torts  Occur.  There  are  various  ways  in  which  torts 
may  occur.  One  may  take  unlawful  action  in  the  nature  of  tort,  by : 

1.  Actually  doing  something  he  has  no  legal  right  to  do,  to  the  preju- 

dice or  injury  of  another. 

2.  Doing  something,  not  in  itself  unlawful,  wrongfully  by  such  means, 

at  such  times,  or  in  such  manner  that  injury  results  to  another. 

3.  Neglecting  to  do  that  which  he  ought  to  do,  with  the  result  that 

another  suffers  injury. 

Under  the  first  class  come  trespass,  fraud,  and  others ;  under  the  second, 
under  some  conditions,  nuisance ;  while  negligence  clearly  comes  under  the 
second  and  third  classes. 

LIST  OF  TORTS 

An  eminent  writer  has  classified  as  torts  the  following :  fraud ;  negli- 
gence ;  trespass ;  violation  of  right  of  support ;  violation  of  water  rights  ; 
nuisance ;  conversion ;  procuring  refusal  to  contract ;  procuring  breach  of 
contract;  infringement  of  patents,  trademarks,  and  copyrights;  escape 
of  dangerous  things ;  damage  by  animals ;  slander  and  libel ;  slander  of 
title ;  malicious  prosecution ;  false  imprisonment ;  seduction ;  assault  and 
battery. 

In  many  of  these  the  engineer  has  little  interest,  and  only  a  few  will  re- 
ceive further  attention  here. 

FRAUD 

Fraud  or  Deceit.  A  duty  exists  not  to  mislead  another  to  his  injury 
by  false  and  fraudulent  representations.  The  term  "  deceit  "  is  often 
used  instead  of  "  fraud,"  although  fraud  is  a  more  common  expression. 

Requisites.  In  order  to  establish  fraud  before  a  court  it  is  requisite 
that  there  has  been : 

1 .  A  wrongful  representation  of  fact ; 

2.  which  is  material ; 

3.  and  with  knowledge  of  its  falsity ; 

4.  with  the  intent  that  it  should  be  acted  upon  by  the  other  party ; 

5.  who  did  act  upon  it ; 

6.  to  his  damage ; 

7.  while  ignorant  of  its  falsity. 


TORTS  4-3 

1.  Fact.     The  representation  must  be  of  a  fact,  not  of  opinion,  nor  a 
statement  of  the  law  unless  made  by  a  lawyer  to  one  inexpert  in  the  law. 
It  may  be  made  by  a  statement  or  an  act.     Silence  will  seldom  have  the 
effect  of  representation,  although  this  is  possible  when  happening  in  con- 
nection with  other  acts  or  statements.     The  representation  must  create 
a,  clear  impression  of  a  fact  or  facts. 

2.  Material.     The  fact  must  be  material,  and  not  incidental  and  un- 
important. 

3.  Wilful.     Knowledge  of  its  falsity  on  the  part  of  him  who  made  the 
representation  is  also  essential,  and  the  law  is  satisfied  if  he  made  it  either : 
(a)  knowing  it  to  be  false ;    (6)  recklessly  without  knowledge  of  its  truth 
or  falsity ;   (c)  positively,  when  he  only  believed  it  without  positive  knowl- 
edge ;  (d)  when  it  was  his  duty  to  know  and  the  facts  were  within  his  reach. 

4.  Intent.     As  to  the  intent  that  it  be  acted  on,  in  case  of  a  trans- 
action between  the  two  parties  involved,  no  specific  proof,  probably,  is 
necessary.     In  any  case  motive  is  not  an  essential  element ;   neither  is  it 
required  to  show  an  intent  to  injure  the  other  party ;  that  it  will  benefit 
himself  is  sufficient. 

5.  Acted  Upon.     The  representation  of  fact  must  have  been  acted 
upon ;  however  base  it  may  have  been,  it  can  give  rise  to  no  suit  unless  acted 
upon.     The  party  aggrieved  must  also  have  been  entitled  to  act  upon  it ; 
a  rank  outsider,  who  properly  is  not  connected  with  the  transaction,  is 
not  a  party  entitled  to  act.     Sometimes  any  one  of  a  class  or  community 
may  have  seen  fit  to  act  on  a  proposition  which  has  general  application  and 
interest,  and  thus  properly  be  entitled  to  a  remedy  by  suit  in  tort. 

6.  Injury.     There  must  have  been  injury.     A  suit  is  not  appropriate 
when  there  has  been  no  injury  (beyond  a  loss  of  faith  in  human  nature). 
For  example,  a  suit  for  fraud  based  upon  a  note  obtained  by  fraud  is  not 
applicable  until  the  injury  has  come  through  the  payment  of  the  note ;  or 
in  connection  with  a  contract  until  some  injury  or  damage  has  resulted 
under  the  operation  of  the  contract. 

7.  Ignorance.     The  party  injured  must  have  acted  in  ignorance  of 
its  falsity.     He  must  have  been  deceived  by  the  representations.     If  he 
had  equal  information  as  to  the  facts,  or  if  he  acted  on  the  strength  of 
other  knowledge,  he  has  no  case.     If  there  was  no  warranty  (in  the  case 
of  a  sale)  and  the  buyer  had  ample  opportunity  to  discover  the  facts  and 
did  not,  he  has  no  case. 

Equal  Opportunity.  With  equal  opportunity  at  hand  for  both  parties, 
a  lack  of  prudence  on  his  own  part  prevents  a  man's  maintaining  his  suit. 
When  a  man  himself  reads  a  contract,  he  is  not  in  law  deceived  by  it ; 
when  it  was  knowingly  misread  to  him,  he  may  be  able  to  sustain  a  suit 
for  fraud. 


4-4  TORTS 

Engineer's  Duty.  Under  paragraph  3  (d)  the  court  would  be  likely 
to  decide  that  when  an  engineer  sets  forth  facts  in  a  plan  or  specifications 
by  which  a  contractor  or  other  party  interested  is  deceived,  the  case  is 
one  of  constructive  fraud,  although  the  engineer  had  no  actual  intent  to 
deceive ;  there  was  a  duty  upon  him  which  he  failed  to  observe  to  the  con- 
tractor's injury ;  the  railroad,  the  city,  or  his  client  is  responsible  for  his 
tortious,  his  fraudulent  act.  A  contract  or  specification,  therefore,  some- 
times provides  that  the  information  shown  on  a  plan  shows  the  facts  cor- 
rectly so  far  as  known,  but  that  their  accuracy  is  not  guaranteed. 

Torts  in  Contracts.  In  general  it  is  said  that  a  tort  grows  out  of  duties 
not  created  by  contract,  but  it  is  nevertheless  true  that  fraud  is  very 
often  connected  in  some  way  with  contract,  and  negligence  often  occurs  in 
carrying  out  contracts. 

It  appears  not  to  be  important,  in  the  case  of  a  contract  (be  it  a  con- 
tract of  sale  or  otherwise)  whether  the  false  representations  form  a  part  of 
the  contract  or  were  a  part  of  the  proceedings  which  induced  the  contract. 
Whether  it  be  a  misrepresentation  or  a  warranty,  the  element  of  fraud  in 
it  will  justify  an  action  for  tort,  although  in  some  cases  a  suit  for  breach 
of  contract  might  be  equally  allowable.  Fraud  in  making  a  contract  will 
completely  vitiate  it. 

NEGLIGENCE 

Definition.  A  duty  exists  to  exercise  care  to  avoid  doing  injury  to 
another.  There  is  required  that  amount  of  care,  skill,  and  diligence 
"which  circumstances  justly  demand,"  and  which  a  " reasonable,  prudent, 
and  careful  "  man  may  be  expected  to  exercise.  An  action  or  failure 
to  act  with  such  care,  if  injury  results  to  another,  constitutes  negligence. 

In  the  varied  relations  of  life,  and  in  the  many  positions  in  which  one 
is  placed,  every  one  must  exercise  his  rights  in  such  fashion  that  others 
affected  by  such  rights  shall  not  be  injured  by  his  neglect  to  use  due  care. 
The  continued  possession  of  a  right  may  be  a  sufficient  exercise  of  the  right 
to  impose  the  duty. 

Duties  in  Possessing  Property.  The  possession  of  property,  for 
instance,  imposes  duties.  One  must  so  employ  his  property  as  not  to 
injure  others;  he  must  keep  his  premises  in  repair  sufficiently  so  that 
those  invited  or  licensed  to  enter,  may  not  be  injured  by  defects.  In 
general  he  need  not  use  great  care  to  protect  trespassers  or  even  those 
invited  or  licensed  to  enter  certain  parts,  if  they  wander  into  other  parts 
of  the  premises ;  he  may  properly  exercise  his  rights  with  little  or  no  rela- 
tion to  these  people ;  yet,  if  there  is  a  reasonable  possibility  that  a  man 
licensed  to  enter  may  stray  in  unexpected  directions,  some  care  is  neces- 
sary as  to  pitfalls  or  the  like,  so  that  this  man  exercising  due  care  on  his 


TORTS  4-5 

part  may  not  readily  receive  injury ;  even  a  trespasser  may  have  a  remedy 
if  hurt  by  a  spring-gun  set  by  the  owner ;  furthermore,  on  some  premises 
trespassing  is  not  unusual. 

Use  of  Highways.  The  right  to  use  a  highway  or  street  for  purposes 
of  travel  must  be  exercised  with  due  care  to  others  using  it.  In  driving  a 
horse  and  vehicle  or  an  automobile  through  the  streets,  care,  and  some- 
times great  care,  is  necessary  to  avoid  collisions  or  to  avoid  frightening 
horses  or  doing  some  injury  otherwise ;  it  is  necessary  to  use  the  degree  of 
care  that  prudent,  careful,  skilful  men  find  necessary  under  the  circum- 
stances. 

Occupation  of  Highways.  If  a  city  or  town  official,  or  a  contractor 
for  public  or  private  improvements,  when  acting  with  due  authority, 
tears  up  the  street,  or  digs  a  trench,  or  otherwise  interferes  with  travel,  he 
must  protect  it,  perhaps  by  a  railing  or  a  barrier  by  day,  certainly  by  suit- 
able lighting  by  night,  so  that  travelers  exercising  due  care  shall  not  be 
injured. 

A  householder,  or  any  abutter  on  a  highway,  must  exercise  similar 
care  when  he  lawfully  sets  out  ash  barrels,  or  builds  hatchways,  or  when  he 
places  any  obstacles  on  the  sidewalk. 

Others'  Real  Property.  It  has  been  said  that  a  man  has  a  right  to 
dig  in  his  own  land ;  furthermore  a  man  has  a  right  to  build  a  house  on  his 
own  land ;  the  rights  are  reasonably  regarded  as  equal.  The  man  who 
digs  must  not  dig  negligently,  but  must  at  least  give  his  neighbor,  the 
owner  of  the  house,  an  opportunity  to  shore  up  and  protect  it;  if  the 
owner  is  negligent  and  does  not  shore  it,  the  digger  has  the  right  to  dig,  and 
may  even  shore  up  his  neighbor's  house  and  charge  the  expense  to  the  owner. 

Duty  from  Contract  or  Statute.  The  action  which  is  negligently  per- 
formed may  grow  out  of  a  contract,  or  it  may  be  imposed  by  statute,  or 
it  may  follow  from  the  general  exercise  of  a  man's  rights  as  a  citizen  or 
member  of  the  community  and  a  user  of  its  facilities. 

Bailment.  Whenever,  by  arrangement,  an  owner  puts  his  goods  in 
the  hands  of  another  whom  we  call  the  "  bailee,"  and  the  owner  is  en- 
titled to  receive  them  again,  negligence  shall  not  be  exercised  by  the  bailee 
either  in  the  use,  or  in  the  holding  and  care  of  the  goods.  How  much  care 
is  due  depends  upon  the  nature  of  the  case. 

1.  Are  the  goods  held  or  used  for  the  benefit  of  the  bailee?    In  such 
case  considerable  care  must  be  taken. 

2.  Are  the  goods  held  for  the  benefit  solely  of  the  owner,  and  without 
payment  for  the  service  ?     Slight  care  only  is  necessary. 

3.  Are  the  goods  held  for  mutual  benefit?    Ordinary  care  suffices. 
Duty  from  Bailee.     At  one  time  three  classes  of  negligence  were  recog- 
nized, growing  out  of  the  conditions  above  described ;  gross,  ordinary,  and 


4-6  TORTS 

slight  negligence ;  but  the  tendency  is  otherwise  of  late.  Different  degrees 
of  care  are  necessary,  it  is  true,  but  negligence  is  the  result  of  lack  of  that 
care  "  which  the  circumstances  demand,"  and  the  degree  of  care  which 
may  be  negligence  in  one  of  the  above  cases  may  not  be  in  another. 

Duty  to  Bailee.  It  is  further  true  that  where  an  owner  allows  a  bailee 
to  use  his  wagon,  for  instance,  the  owner  is  negligent  if  the  wagon  is  fur- 
nished in  a  seriously  imperfect  condition.  The  owner's  obligation  to  a 
man  who  hires  is  greater  than  to  a  man  who  borrows ;  the  borrower  has 
no  right  to  demand  approximately  perfect  repair  and  safety  before  the 
owner  consents  to  loan  the  wagon.  It  would  be  somewhat  different  if  he 
rented  it ;  especially  if  he  were  in  the  habit  of  renting  it. 

In  the  case  of  common  carriers,  or  warehousemen,  in  holding  goods 
during  repairs,  and  in  many  other  ways,  the  above  subject  of  bailments, 
as  it  is  called,  is  of  much  importance  and  some  difficulty,  but  further  atten- 
tion does  not  seem  wise  here. 

Professional  Service.  In  the  case  of  professional  service,  one  must 
not  be  negligent.  What  amount  of  care  is  necessary  for  the  lawyer,  the 
doctor,  the  engineer,  the  contractor?  It  is  well  settled  that  either  one 
must  exercise  that  degree  of  precaution,  vigilance,  diligence,  and  skill 
which  a  reasonable,  prudent,  skilful  man  of  his  profession  or  occupation 
would  exercise.  Sometime  later  it  may  be  necessary  to  use  the  skill 
which  a  skilful  and  properly  educated  man  would  use;  but  probably 
"  skilful  "  includes  the  effect  of  education  even  now.  A  lawyer  does  not 
guarantee  to  win  his  case ;  a  doctor  does  not  agree  to  effect  a  cure.  Neither 
lawyer  nor  doctor  can  be,  nor  is,  free  from  liability  to  error  in  some  part 
of  the  work;  nor  is  the  engineer  or  contractor.  A  lawyer  must  under- 
stand the  law ;  the  doctor  must  have  adequate  knowledge  of  the  practice 
of  medicine ;  the  engineer  must  understand  the  laws  of  mechanics  and  the 
behavior  of  materials ;  the  contractor  must  understand  labor  and  materials 
and  processes  necessary  in  his  work.  The  care  necessary  "  under  the  cir- 
cumstances of  the  case  "  is  the  requisite.  Probably  the  ordinary  country 
doctor  would  not  in  general  be  justified  in  attempting  an  intricate  sur- 
gical operation  except  in  an  emergency.  An  engineer  whose  practice 
had  been  mainly  in  surveying  would  not  ordinarily  be  justified  in  design- 
ing a  bridge  of  unusual  size  and  importance. 

Proximate  Cause.  In  whatever  line  of  action  or  inaction  it  may  occur, 
the  negligence  must  be  the  proximate  cause  of  the  injury,  and  for  this  it 
is  ordinarily  enough  that  a  chain  of  circumstances  is  set  in  motion  which 
naturally  results  in  the  injury;  yet  if  an  intervening,  independent  acci- 
dental circumstance  occurs  without  which  no  injury  would  have  resulted, 
there  can  be  no  claim  of  negligence ;  nor  is  there  liability  for  an  accident 
if  a  reasonable,  careful  man  could  not  have  foreseen  the  unfortunate  result. 


TORTS  4_7 

Contributory  Negligence.  Nor  under  the  Common  Law  can  a  man  be 
held  responsible,  even  if  he  has  been  negligent,  if  as  an  intervening  cause 
the  person  injured  has  himself  been  negligent  in  a  way  which  has  contrib- 
uted to  the  injury.  This  is  the  doctrine  of  "  contributory  negligence  " 
which  has  been  of  much  importance,  especially  where  relations  of  em- 
ployer and  employed  are  concerned ;  and  a  considerable  amount  of  Statute 
Law  has  been  enacted  first  and  last  touching  contributory  negligence. 

Comparative  Negligence.  In  some  cases  there  has  been  an  attempt  by 
statute  to  discriminate  as  to  the  "  comparative  negligence  "  of  two  parties. 
If  the  party  injured  contributed  in  any  material  degree  to  the  result,  the 
Common  Law  excused  the  party  whose  negligence  primarily  caused  the 
injury;  the  doctrine  of  comparative  negligence  is  not  generally  adopted. 

While,  as  has  been  stated,  the  tendency  now  is  not  to  recognize  "  de- 
grees of  negligence  "  nevertheless  the  statutes  of  some  States  do  distin- 
guish between  simple  and  "  gross  "  negligence. 

Essentials  of  Negligence.  In  order  to  establish  negligence  in  law, 
there  must  be : 

1.  A  legal  duty. 

2.  A  neglect  of  this  duty. 

3.  Injury  to  the  one  to  whom  the  duty  is  owed. 

4.  A  causal  connection  between  the  breach  of  duty  and  the  injury, 
which  makes  the  one  responsible  for  the  other. 

Evidence.  Evidence  sufficient  to  satisfy  a  jury  is  necessary  upon  these 
points.  An  accident  alone  is  not  proof  of  negligence.  It  may  be  that  the 
only  practical  means  of  establishing  the  duty  is  to  show  that  the  person 
injured  was  in  the  exercise  of  his  rights,  which  it  is  the  duty  of  others  to 
respect.  It  is  necessary  to  establish  as  facts,  the  acts  which  are  claimed 
to  constitute  negligence,  in  such  a  way  and  in  such  sequence,  as  to  satisfy 
reasonable  men  that  the  acts  constituted  negligence. 

Burden  of  Proof.  To  establish  negligence,  the  burden  of  proof  is 
naturally  upon  the  plaintiff,  the  one  injured  by  the  neglect.  But  what 
about  contributory  negligence?  In  some  States  it  is  sufficient  that  the 
facts  presented  by  the  plaintiff  fail  to  show  contributory  negligence. 
In  others,  as  in  Massachusetts,  it  is  required  that  the  plaintiff  shall  estab- 
lish definitely  his  freedom  from  contributory  negligence.  In  the  first 
case  the  burden  of  proof  as  to  contributory  negligence  is  in  effect  on  the 
defendant ;  in  the  second  case  clearly  on  the  plaintiff.  In  some  trials  the 
difference  means  the  winning  or  losing  of  the  case,  and  the  rule  is  different 
in  different  States. 

Examples.  As  a  matter  of  evidence,  in  the  case  of  an  alleged  defect  in 
highway,  sidewalk,  machine,  or  structure,  evidence  of  the  condition  of 
the  highway  or  machine  just  before  or  just  after  the  accident  will  be 


4-8  TORTS 

admissible  as  bearing  upon  the  condition  at  the  time  of  the  accident ;  and 
it  is  desirable,  if  possible,  to  have  testimony  that  the  condition  had  not 
changed;  these  points  are  definitely  of  importance  for  the  engineer  to 
appreciate. 

Functions  of  Judge  and  Jury.  When  the  evidence  is  in,  it  is  usually  a 
question  for  the  jury  to  determine  whether  or  not,  from  the  facts  presented, 
there  was  negligence.  In  general,  in  lawsuits  when  there  is  no  inharmo- 
nious testimony,  when  the  facts  are  not  in  dispute,  the  judge  decides  what 
law  applies  to  these  established  facts.  In  a  case  of  negligence,  however, 
the  jury  decides  whether  the  facts  existing  do  show  a  lack  of  care;  in 
other  words,  whether  there  was  a  lack  of  care  is  a  matter  of  fact  and  not  a 
question  of  law.  Sometimes  when,  as  it  is  said,  it  is  clear  that  reasonable 
men  could  come  to  but  one  conclusion,  the  judge  will  settle  the  matter  as  a 
question  of  law,  but  for  the  engineer  this  feature  of  a  trial  is  of  minor 
importance. 

Measure  of  Damages.  What  is  the  measure  of  damages?  In  the  case 
of  injury  to  property,  it  is  in  general  the  difference  in  value  before  and 
after  the  offense.  In  the  case  of  personal  injuries,  loss  of  time,  expense  of 
illness,  decrease  in  capacity  for  work,  bodily  disfigurement  and  pain, 
mental  suffering,  shock  or  fright ;  all  of  these  may  have  an  influence  upon 
the  award ;  and  in  the  case  of  gross  negligence,  exemplary  damages  may 
be  awarded  from  a  punitive  standpoint.  In  some  cases  the  loss  of  services 
of  the  person  injured,  a  wife,  daughter,  or  servant,  may  be  the  measure  of 
the  damage. 

Care  and  Foresight  by  Engineers.  While  securing  evidence  is  an  im- 
portant function  of  the  engineer  in  many  cases  of  negligence,  a  more  im- 
portant duty  is  for  the  engineer  to  exercise  sufficient  care  and  foresight  to 
properly  design  work  under  his  control  or  advice,  to  adequately  maintain 
it,  and  to  see  that  the  operation  is  in  good  hands  and  that  proper  methods 
are  used,  so  that  few  if  any  accidents  shall  occur  which  are  not  due  to  the 
contributory  negligence  of  any  one  who  may  suffer  injury.  The  engineer 
should  intend  to  exert  more  skill,  care,  and  diligence  than  the  law  defi- 
nitely demands  of  him ;  this  as  a  matter  of  good  business.  As  an  example, 
many  railroads,  both  as  to  signals  and  as  to  braking  apparatus,  have  made 
improvements  more  frequently  than  the  law  could  demand,  fairly  inter- 
preted ;  no  doubt,  other  illustrations  will  occur  to  the  reader. 

The  subject  of  negligence  is  of  great  importance  in  considering  the 
relations  of  master  and  servant,  or  employer  and  employee,  and  in  the 
chapter  on  agency,  master  and  servant,  some  additional  attention  will 
be  given  to  negligence. 


TORTS  4-9 

TRESPASS 

Definition.  A  duty  exists  not  (a)  to  enter  another's  lands  without  per- 
mission, nor  (6)  to  interfere  with  his  possession  of  personal  property. 
A  violation  of  this  duty  is  called  "  trespass." 

Trespass  and  License.  The  engineer  and  contractor  have  special 
interest  in  trespass  upon  lands,  as  circumstances  may  make  it  easy  for  them 
to  offend  in  this  way.  It  should  be  understood  that  it  is  not  necessary 
always  to  secure  specific  permission  to  enter  a  man's  premises;  whoever 
has  the  right  to  possession  of  land  holds  it  in  general  subject  to  easements 
or  licenses  of  some  sort,  and  there  are  several  classes  of  license. 

Every  one  in  business  impliedly  invites  the  public  to  enter  his  place 
of  business,  and,  similarly,  every  householder  invites  certain  tradesmen 
and  neighbors  to  enter  his  grounds  and  perhaps  his  house ;  there  are  often 
limitations  imposed  as  to  the  extent  of  the  invitation.  In  other  cases, 
the  owner  or  lessee  or  tenant  expressly  invites  certain  persons  upon  his 
land  to  perform  certain  specific  acts;  such  license  may,  in  general,  be 
recalled  at  any  time. 

Legal  Entry.  The  law  in  some  cases  permits  an  entry;  in  case  of  a 
conflagration,  the  public  authorities  enter,  and  with  dynamite  demolish 
the  building  in  order  to  stay  the  course  of  the  flames.  Where  a  highway  is 
impassable,  the  traveler  may  lawfully  enter  upon  adjoining  lands;  this 
as  a  matter  of  Common  Law;  but  curiously  enough  where  there  is  only 
a  right  of  way  its  limits  must  not  be  transgressed. 

Surveyor's  Trespass  or  License.  A  surveyor  with  his  rodman  enters 
certain  premises  to  make  inquiries  and  sometimes  does  this  under  license ; 
if  he  afterwards  remains  on  the  land  without  permission,  in  order  to  make 
a  survey,  he  is  doubtless  a  trespasser.  Surveyors  frequently  do  enter 
lands  without  previous  permission  and  there  is  seldom  any  objection. 
They  lay  themselves  liable  to  a  suit  for  trespass ;  but  ordinarily  they  can 
take  the  risk  that  no  exception  will  be  taken  to  their  action ;  the  damages 
probably  would  be  small,  or  nominal,  but  any  misdemeanor  committed  may 
result  in  exemplary  damages  which  may  be  of  considerable  amount. 

Entry  under  Rights  of  Eminent  Domain.  The  law  in  most  States 
allows  a  city,  a  railroad,  or  a  water  works  company  to  take  lands  for 
public  uses  from  any  owner  by  legal  process  under  the  "  right  of  eminent 
domain,"  and,  when  this  process  has  been  pursued  to  the  proper  point, 
the  entry  on  the  land  becomes  lawful ;  but  if  the  city  or  town  neglects  to 
use  this  legal  process,  it  has  no  more  right  on  the  land  than  any  other 
trespasser  and  may  be  made  to  pay  damages  independent  of  whatever 
may  be  awarded  later  in  the  eminent  domain  proceedings  if  these  are 
afterwards  instituted. 


4-10  TORTS 

Injury  not  Essential.  In  order  that  a  trespass  be  committed,  it  is  not 
necessary  that  any  injury  be  done ;  the  offense  lies  in  the  unlawful  entry ; 
furthermore  the  trespass  is  against  the  party  in  possession  of  the  land 
rather  than  against  the  owner.  The  old  form  of  pleading  in  trespass 
recites  that  "  with  force  and  arms  "  the  defendant  "  entered  and  with  his 
feet  in  walking  trod  down  and  trampled  upon  the  grass  and  herbage." 

Trespass  is  against  Possession.  It  appears  that  possession  is  con- 
sidered so  important  that,  where  the  possessor  has  only  a  shadow  of  title, 
the  owner,  not  then  in  possession,  is  not  allowed  to  forcibly  enter  and  dis- 
turb peaceful  possession.  The  law  does  not  allow  the  owner  to  assume 
the  law's  function  (of  deciding  the  title)  to  the  extent  of  breaking  the 
peace ;  however,  the  owner,  when  in  possession,  may  forcibly  resist  inva- 
sion. The  engineer  or  contractor  who  desires  to  use  lands,  for  storing 
material  or  otherwise,  should  secure  permission  from  the  party  in  posses- 
sion, the  lessee  or  tenant  perhaps,  and  for  some  uses  also  from  the  owner ; 
for  instance  the  tenant  has  limited  powers,  and  may  cut  crops,  but  not 
chop  down  trees  without  the  owner's  permission;  a  tenant  certainly 
cannot  grant  to  a  contractor  a  right  which  he  does  not  himself  possess. 

Examples.  The  cutting  or  tramping  down  of  crops,  the  carrying  away 
of  gravel,  stone,  ore,  or  coal,  the  carting  across  land  unoccupied  or  otherwise, 
the  deposit  of  lumber  or  other  material,  or  dumping  surplus  earth  or  rock 
on  lands ;  any  one  of  these  actions  constitutes  a  trespass.  The  diversion 
of  water,  or  collecting  surface  water  and  discharging  it  in  volume  on  land, 
also  constitutes  trespass ;  but  not  disturbing  or  absorbing  waters  altogether 
underground ;  nor  casting  water  upon  a  lot  as  the  result  of  grading  a 
street ;  the  owner  may  raise  a  bank  or  dike  and  turn  it  back  if  he  cares  to. 

Public  Rights  in  Highways.  Land  bounded  by  a  public  highway  com- 
monly carries  title  to  the  center  line  of  the  highway.  In  many  cases, 
however,  there  are  statutes  providing  otherwise ;  moreover  a  deed  con- 
veying land,  for  instance  only  to  the  westerly  side  line  of  a  street,  often  does 
not  convey  to  the  center,  although  the  element  of  intent  is  important; 
but  deeds  in  fee  simple  to  a  city  or  town,  of  lands  for  highways  probably 
divest  the  owner  of  all  title  in  the  street,  although  there  are  some  decisions 
to  the  contrary. 

The  public  then  have  rights  only  for  the  proper  purposes  of  a  highway, 
and  where  a  private  party  uses  it  to  store  material  of  any  sort,  or  plows 
it  and  removes  soil,  trespass  results;  the  same  is  true  when  trees  have 
been  removed  from  the  sidewalk  or  where  branches  of  trees  have  been 
cut  to  allow  electric  lighting  wires  to  be  strung  from  pole  to  pole. 

Examples.  In  the  case  of  a  highway  under  construction  and  duly 
authorized,  the  court  decided  in  one  case  that  there  was  no  trespass  al- 
though the  oxen  used  passed  on  the  plaintiff's  land,  when  this  was  neces- 


TORTS  4-11 

sary  to  the  conduct  of  the  work  and  no  undue  injury  was  done ;  and  further 
stated  that  the  law  allows  the  highway  surveyor  to  use  necessary  means 
to  do  such  work. 

But  where  a  contractor  built  a  duly  authorized  sewer  in  a  street,  he 
had  no  right  to  go  upon  abutting  premises  and  put  earth  upon  them ;  he 
committed  a  tort,  a  trespass,  and  was  liable  for  damages.  In  blasting,  if 
pieces  of  rock  are  thrown  upon  another's  land,  or  through  a  window  or 
roof,  there  is  a  clear  case  of  trespass. 

Engineer's  Duty.  In  general,  the  railroad,  the  city,  represented  by 
the  engineer  or  the  contractor  under  his  control,  either  of  these  is  more 
likely  to  commit  trespass  than  to  be  the  sufferer  from  it;  the  nature  of 
the  duty  required  of  the  engineer  is  thus  mainly  defined. 


VIOLATION   OF   RIGHT   OF   SUPPORT 

Definition.  A  duty  exists  not  to  remove  the  lateral  support  from 
another's  land  in  its  natural  state  when  not  loaded  with  walls,  buildings, 
or  materials,  nor  to  withdraw  subjacent  support.  A  failure  to  observe 
this  duty,  resulting  in  another's  injury,  constitutes  a  "  violation  of  right 
of  support." 

Support  of  Soil  Only.  At  Common  Law,  the  landowner  has  the  right 
to  have  his  soil  preserved  intact  as  against  its  own  weight  by  the  ordinary 
elements,  and  if  the  adjoining  owner  excavates  so  near  the  line  as  to  cause 
the  same  to  crumble,  he  is  liable  for  ensuing  damages  without  regard  to 
his  care  or  negligence  in  so  doing.  The  landowner  has  the  right  to  lateral 
support  of  the  soil  only,  but  no  natural  easement  for  the  support  of  his 
buildings,  and  upon  notice  of  excavation  in  adjacent  land,  it  is  his  duty 
to  protect  his  building  by  underpinning  perhaps ;  otherwise  the  excavator 
may  enter  and  protect  at  the  owner's  expense,  or  proceed  with  his  excava- 
tion, using  ordinary  care  under  the  circumstances. 

Buildings.  Not  only  is  there  no  liability  when  the  weight  of  build- 
ings helped  to  cause  the  soil  to  fall,  but  where  the  soil  fell  of  its  own  weight 
only,  and  in  no  way  due  to  the  buildings  thereon,  and  the  buildings  also 
fell  in  consequence  of  the  dropping  of  the  soil,  the  damage  is  measured  by 
the  injury  to  the  soil  and  includes  no  part  of  the  injury  to  the  buildings. 
Such  is  the  law  in  this  country ;  in  England  a  different  rule  prevails. 

Negligence  Immaterial.  The  offense  occurs  if  the  support  of  the  soil 
is  withdrawn,  whether  or  not  there  has  been  any  negligence;  in  proving 
a  case,  therefore,  negligence  need  not  be  shown.  Unlike  trespass,  however, 
actual  damage  must  be  shown  or  the  case  will  be  thrown  out  of  court. 

Easements  Granted.  It  appears  to  be  the  case  that,  where  a  landowner 
sells  land  for  a  building,  a  highway,  or  a  railroad,  he  grants  also  an  ease- 


4-12  TORTS 

ment  against  himself  for  the  support  of  any  buildings  on  the  land  at  the 
time  it  was  sold,  or  for  such  support  as  may  be  necessary  for  the  purpose 
for  which  the  land  was  sold;  a  deed  for  a  railroad,  for  instance,  often 
specifies  land  for  its  right  of  way.  Frequently  land  is  sold  for  the  specific 
object  of  building,  and  the  purchaser  then  acquires  a  right  to  the  support 
of  his  buildings  from  the  seller  which  he  does  not  have  as  to  an  independent 
neighbor. 

Underpinning  Buildings.  It  has  been  ruled  also  that,  in  underpinning 
a  building,  a  man  who  uses  a  prop  resting  on  his  neighbor's  land  has  a 
right  of  support  against  any  stranger  who  removes  it,  although  he  may  have 
no  case  against  the  neighbor  if  he  removes  it,  and  may  even  be  a  trespasser 
against  the  neighbor  by  placing  the  prop  on  his  ground.  A  simple  ex- 
ample of  the  principle  stated  occurs  when  a  man  builds  two  houses  on  his 
land  with  foundations  abutting  and  sells  the  houses  to  different  purchasers. 
Each  purchaser  has  a  right  of  support  as  to  the  neighbor.  But  when  two 
houses  have  foundations  which  abut,  and  these  houses  were  erected  by 
independent  owners,  no  such  right  of  support  attaches. 

Avoid  Negligence.  It  should  not  hastily  be  assumed  that  one  may 
remove  a  contiguous  foundation  or  even  supporting  soil  from  a  neighbor's 
building.  While  not  liable  as  a  matter  of  right  of  support,  he  must 
nevertheless  not  exercise  negligence  toward  his  neighbor.  He  certainly 
should  notify  him,  and  thus  give  his  neighbor  opportunity  to  protect  him- 
self ;  on  his  failure  to  do  so  he  may  underpin  his  neighbor's  building,  using 
ordinary  care  only  in  so  doing.  It  is  not  uncommon  for  an  agreement  to 
be  made  by  which  the  contractor  who  excavates  also  undertakes  to  protect 
a  neighboring  building.  In  one  case  of  this  sort,  although  permission  was 
given  to  enter  the  neighbor's  land  for  this  purpose,  it  was  held  that  the 
contractor  was  not  justified  in  digging  away  the  soil  underneath  the  foun- 
dation ;  this  apparently  was  trespass. 

Legal  Advice.  Where  buildings  are  valuable,  where  the  interests  are 
large,  it  will  be  wise  to  consult  a  capable  lawyer  as  to  one's  rights,  unless 
some  one  concerned  in  the  work  has  already  acquired  a  knowledge  of  the 
law  applicable,  as  interpreted  by  the  laws  of  the  State  in  which  the  work 
is  done,  and  this  should  include  a  knowledge  of  the  proper  form  of  agree- 
ment in  case  an  owner  or  his  contractor  undertakes  the  work  of  protecting 
his  neighbor's  building. 

Ground  Waters  and  Quicksand.  In  the  construction  of  a  sewer  or 
other  underground  work,  the  withdrawal  of  ground  waters  does  not  consti- 
tute a  tort  even  if  some  settlement  of  adjoining  soil  results ;  but  if  quick- 
sand is  encountered,  and  it  flows  into  the  trench  causing  subsidence  of 
near-by  soil,  a  suit  for  violation  of  right  of  support  may  properly  be  main- 
tained without  showing  negligence.  If  negligence  can  be  shown,  it  may 


TORTS  4—13 

be  better  to  bring  the  suit  for  negligence,  and  in  this  case  evidence  of 
negligence  must  be  secured. 

VIOLATION  OF  WATER  RIGHTS 

Classification  of  Waters.  There  are  several  classes  of  waters  whose 
characteristics,  and  the  rights  connected  with  which,  the  engineer  should 
understand.  A  sufficient  classification  for  present  purposes  is  :  1.  Water- 
courses. 2.  Surface  waters.  3.  Percolating  water.  4.  Navigable  waters. 
5.  Lakes  and  ponds. 

Watercourses.  A  watercourse  consists  of  bed,  banks,  and  flowing 
water ;  constant  flow  is  not  essential,  however ;  it  may  be  dry  at  times. 
As  to  title  or  ownership,  the  bed  of  a  stream  is  regarded  as  real  property, 
real  estate;  with  navigable  streams,  the  title  rests  in  the  State;  if  the 
stream  separates  two  States,  it  rests  in  the  Nation.  The  boundary  lies 
along  the  middle  of  the  main  channel,  unless  provided  otherwise  by  treaty 
or  agreement ;  and  if  a  new  and  distinct  channel  is  afterwards  formed, 
the  middle  of  the  old  channel  is  still  the  boundary;  when  a  channel  is 
constantly  and  slowly  changing  by  attrition  and  accretion,  however,  the 
boundary  changes  with  it. 

Riparian  Rights.  With  non-navigable  streams  the  riparian  owner  on 
either  side  owns  to  the  middle  of  the  stream,  and  each  has  rights  in  con- 
nection with  it. 

Every  riparian  owner  has  a  right  to  the  reasonable  use  of  water  flow- 
ing past  his  land,  but  is  not  allowed  to  interfere  with  the  lawful  use  of  the 
water  by  other  proprietors  to  their  injury ;  their  rights  are  equal  to  his ; 
in  general,  he  must  allow  the  water  to  pass  on  undiminished  in  quantity 
and  unimpaired  in  quality. 

Reasonable  Use  of  Water.  What  is  a  reasonable  use  of  the  water  by 
the  riparian  owner?  This  varies  somewhat  in  different  States.  In  the 
older  States,  in  the  eastern  part  of  the  country,  it  is  restricted  to  the 
domestic  uses  of  home  and  farm,  drinking,  washing,  cooking,  and  for  his 
stock.  For  these  purposes  he  probably  could  consume  all  the  water  of  the 
stream  if  necessary,  but  any  extensive  use  would  be  looked  upon  with 
suspicion,  and  would  be  justified  only  by  real  necessity  combined  with 
economy,  and  secured  perhaps  only  after  a  costly  lawsuit ;  ordinarily  the 
reasonable  use  will  consume  comparatively  little  of  the  volume.  A  city 
or  town  which  has  become  a  riparian  owner  clearly  cannot  take  the  water 
for  a  town  supply  for  domestic  or  fire  purposes.  In  these  sections  of  the 
country,  a  use  must  be  clearly  necessary  to  justify  abstracting  any  con- 
siderable quantity ;  the  water  may  not  be  used  for  the  general  purposes  of 
manufacturing  as  distinct  from  power. 


4-14  TORTS 

Priority  of  Appropriation.  In  the  mining  regions  of  the  Pacific  coast 
and  in  the  arid  regions,  the  reasonable  use  of  water  has  been  quite  different ; 
without  water,  mining  is  impossible;  and  irrigation  for  the  lands  is  a 
necessity  for  productiveness  and  for  the  prosperity  or  even  the  existence 
of  the  community.  Growing  out  of  these  necessities  priority  of  appropria- 
tion of  the  water  became  the  early  custom,  and  was  acquiesced  in  by  the 
national  government  which  was  the  riparian  owner  of  the  other  lands  on  a 
stream;  and  finally  Statute  Laws  were  passed,  first  sanctioning  the  cus- 
toms prevailing  in  mining  camps,  and  later  definitely  regulating  these 
rights  along  the  line  of  priority  of  appropriation;  Congress  also  passed 
legislation  legalizing  priority  of  possession  on  the  public  domain  of  the 
United  States. 

Water  Power.  In  New  England,  the  use  of  water  power  for  mills  has 
been  of  much  importance  to  the  prosperity  of  the  community  and  has 
been  favored  in  various  ways  by  legal  decisions.  As  the  simple  use  of 
water  power  does  not  consume  nor  injure  the  water,  it  is  an  allowable  use, 
and  one  to  be  protected.  In  some  of  the  New  England  States  if  a  man 
wants  to  build  a  dam  to  develop  a  water  power,  he  may  by  right  of  emi- 
nent domain  secure  flowage  rights  over  the  lands  above,  paying  of  course 
a  reasonable  sum  for  these  rights. 

Mill  Privileges.  In  Massachusetts,  something  of  the  principle  of 
prior  appropriation  also  exists  to  protect  the  owner  of  a  mill  privilege. 
If  an  owner  erects  a  mill  and  builds  a  dam,  he  has  a  right,  by  prior  appro- 
priation and  use,  to  the  waters  of  the  stream  to  run  his  mill,  and  the  owners 
above  or  below  must  not  build  dams  to  interfere  with  the  workings  of  his 
mill ;  he,  on  his  part,  however,  must  return  to  his  lower  neighbors  all  the 
water  he  has  used  to  run  his  mill. 

Law  versus  Economic  Use.  It  is  idle  to  suggest  that,  where  no  question 
of  water  power  is  involved,  the  economic  use  of  water  would  best  be 
reached  if  each  riparian  owner  was  allowed  a  considerable  use  for  all  pur- 
poses, so  regulated  that,  while  each  has  his  share,  the  owner  lowest  on  the 
stream  should  by  his  use  exhaust  it ;  clearly  this  is  not  the  law  except  that, 
in  the  Pacific  and  arid  States,  some  approach  is  made  to  it.  The  right  of 
the  riparian  owner  to  use  the  water  is  incident  and  appurtenant  to  the 
ownership  of  the  land,  and  this  fact  strongly  tends  to  prevent  legislation 
modifying  this  right  materially,  as  this  would  smack  of  taking  a  man's 
property  without  due  process  of  law  and  without  adequate  compensation, 
and  would  be  therefore  unconstitutional. 

Lawyer  Necessary.  It  is  hardly  safe  to  carry  on  any  important  work 
involving  riparian  rights  without  consulting  a  careful  lawyer  practicing  in 
the  State  where  the  work  is  to  be  done,  since  the  interpretation  of  the  laws 
in  different  States  varies  materially.  Probably  in  every  State  the  water 


TORTS  4—15 

must  run  past  without  deterioration  in  quality,  a  matter  of  interest  to 
engineers  in  connection  with  water  supply,  with  sewerage,  and  with 
manufacturing. 

Manufacturing  Wastes.  Manufacturing  wastes  are  often  deleterious, 
and  it  may  happen  that  continued  use  may  lead  to  the  acquirement  by 
prescription  of  rights  to  discharge  waste.  Certainly  if  damage  can  be 
shown  by  the  riparian  proprietor  lower  on  the  stream,  he  has,  if  taken  in 
time,  his  remedy  by  action  at  law.  Even  where  his  damage  is  nominal, 
he  may  bring  a  case  in  Equity  (explained  in  a  later  chapter)  to  enjoin  fur- 
ther pollution  of  the  stream,  for  the  manufacturer's  rights  acquired  by  use 
and  prescription  might  afterwards  be  exercised  with  some  large  measure  of 
pollution. 

Anomalies.  There  are  some  anomalies  in  the  law  touching  this  matter. 
For  instance,  sewage  must  not  be  discharged  into  a  stream,  as  that  would 
constitute  a  nuisance ;  but,  if  a  city  is  a  riparian  owner,  the  water  flowing 
over  the  lands  may  carry  street  droppings  and  in  that  way  bring  much 
filth  into  the  stream.  Again  cattle  may  go  to  the  stream  to  drink  and 
may  stir  the  mud  and  otherwise  foul  the  water ;  but  a  pigpen  close  to  the 
banks  of  a  stream  is  a  nuisance. 

Waterworks  and  Sewers.  —  A  city  may  purchase  the  riparian  rights 
of  all  owners  down  the  stream  and  then  be  entitled  to  use  the  water  for  a 
public  supply;  the  city  may  perhaps,  by  buying  rights,  turn  its  sewage 
into  a  stream  provided  no  nuisance  is  created ;  a  mill  and  manufacturing 
company  may  do  the  same  and  turn  mill  wastes  into  the  watercourse.  All 
work  of  this  sort  should  be  done  only  under  competent  legal  advice. 

Surface  Waters.  Where  water  spreads  like  a  blanket  in  flowing  over 
the  surface,  it  is  not  a  watercourse,  and  the  law  of  riparian  rights  does  not 
apply.  An  owner  may  appropriate  so  much  as  he  likes  of  such  water,  but 
he  must  not  befoul  it.  In  many  States  he  is  at  liberty  to  erect  a  barrier 
at  the  upper  side  of  his  land  and  turn  back  the  water,  or  divert  it  upon  a 
neighbor's  land ;  in  other  States  the  law  does  not  justify  this ;  so  again  no 
general  rule  can  be  stated  here. 

Percolating  Waters.  When  the  water  percolates  beneath  the  surface, 
if  it  is  known  to  flow  in  a  regular  channel,  the  owner  of  lands  above  the 
stream  must  not  appropriate  the  waters  to  the  injury  of  other  owners; 
but  this  is  seldom  the  case  and,  with  waters  percolating  widely  under  the 
surface,  an  owner  may  sink  his  well  or  draw  off  the  water  for  any  reasonable 
purpose,  even  if  it  should  drain  his  neighbor's  well ;  the  law  will  support 
him  in  so  doing.  However,  it  is  the  law,  in  New  York  State  at  least,  that 
the  city  may  not  sink  wells  on  its  own  land  and  pump  large  quantities  of 
water,  with  the  effect  of  drawing  away  water  from  an  extensive  contiguous 
district,  for  this  is  not  a  reasonable  use  or  exercise  of  the  right.  Neither 


4-16  TORTS 

will  a  man  be  allowed  to  contaminate  percolating  waters  by  building 
privies  or  cesspools  where  the  effect  will  be  contaminating.  This  matter 
is  perhaps  more  peculiarly  appropriate  to  the  subject  of  Nuisance. 


NUISANCE 
Definition.     Nuisance  has  been  defined  as  the  disturbing  of 

"  the  reasonably  comfortable  use  and  enjoyment  of  his  property  by  another, 
or  the  enjoyment  by  him  of  a  common  right." 

The  test  to  be  applied  is  whether  the  conduct  of  the  defendant,  or  the 
state  of  things  for  which  he  is  responsible,  subjects  ordinary  persons  in 
the  neighborhood  to  material  and  unreasonable  discomfort. 

Nuisance,  Trespass,  Negligence.  It  is  difficult  in  some  cases  to  dis- 
tinguish between  nuisance,  trespass,  and  negligence.  Nuisance  ordinarily 
means  the  use  of  one's  property  to  the  disadvantage  of  a  neighbor ;  tres- 
pass, an  offense  against  a  neighbor's  property ;  either  offense  may  be  en- 
tirely free  from  negligence.  For  a  nuisance  to  exist  it  must  violate  some 
legal  right,  must  work  some  material  annoyance,  inconvenience,  or  in- 
jury ;  that  it  is  unpleasant  or  unsightly  is  not  sufficient,  and  the  question 
of  intent  is  not  important.  What  is  a  nuisance  in  one  place,  or  under 
certain  circumstances,  is  not  necessarily  so  in  all  places  and  under  all 
circumstances.  In  definitely  residential  sections,  the  carrying  on  of  cer- 
tain necessary  trades  would  constitute  a  nuisance;  the  courts  consider 
not  only  the  thing  done,  but  the  place  and  the  circumstances. 

Injury  to  Health,  Comfort,  or  Property.  The  injury  may  be  either  to 
property  or  to  health  and  comfort.  In  most  localities  chemical  works,  gas 
works,  slaughter  houses,  or  any  works  sending  out  noxious  or  offensive 
odors,  vapors,  or  stenches,  such  as  to  cause  material  physical  discomfort 
and  annoyance,  are  nuisances ;  the  same  is  true  of  manufacturing  plants 
where  the  noise,  vibration,  or  smoke  cause  sufficient  discomfort  to  resi- 
dents close  by.  The  fouling  of  streams  or  waters,  whether  on  the  surface 
or  underground,  whether  ponds  or  watercourses,  constitutes  a  similar 
offense.  Along  a  different  line,  the  unlawful  obstruction  of  navigable 
waters,  a  highway,  a  sidewalk,  or  a  right  of  way  is  a  nuisance ;  also  erect- 
ing or  maintaining  a  building  whose  roof  overhangs  a  neighbor's  lot  and 
discharges  water  from  the  eaves ;  also  maintaining  a  dam  in  an  insecure 
state,  or  any  other  structure  likely  to  give  way  and  do  damage.  Nuisance 
may  also  result  from  the  storage  of  explosives  or  gas  or  oil,  or  a  large  volume 
of  water,  or  of  any  dangerous  things  in  a  place  where  their  escape  (or  dis- 
charge) will  do  serious  injury,  and  where  their  presence  is  a  menace  to 
health  or  reasonable  comfort.  There  is  evidently  an  opportunity  to  take 


TORTS  4-17 

action  in  these  cases  before  direct  physical  damage  has  resulted,  provided 
that  injury  to  property  has  resulted,  whether  in  rental  value  or  otherwise. 

Negligence  Often  a  Feature.  In  a  number  of  these  cases,  negligence 
is  a  feature  of  the  offense,  but  in  some  of  them  a  suit  for  nuisance  may  be 
instituted  at  once,  while  a  suit  for  negligence  may  be  allowed  only  after 
direct  physical  damage  has  followed  the  negligence.  In  the  conduct  of 
engineering  work,  in  cities  especially,  there  is  the  opportunity  for  the 
creation  of  a  nuisance ;  and,  perhaps  in  some  cases  where  it  is  well-nigh 
unavoidable,  it  may  be  wise  to  trust  to  the  good  nature  of  the  community 
to  tolerate  a  temporary  invasion  of  their  rights.  Sometimes,  however, 
this  may  prove  expensive ;  a  firm  of  contractors  occupied  part  of  a  public 
square  in  a  large  city  to  the  injury  of  a  hotel  opposite,  and  finally  paid 
$80,000  for  the  injury  done. 

Public  or  Private.  A  nuisance  may  be  public  or  private.  When  it  is 
purely  public,  an  individual  who  suffers  only  as  others  of  the  public  do, 
cannot  sue  for  damages  to  himself ;  he  must  sustain  damages  peculiar  to 
himself  or  distinct  from  the  general  public.  He  must  then  present  evi- 
dence of  personal  damage ;  injury  to  his  neighbor  is  not  material,  and  evi- 
dence of  it  will  not  be  accepted  except  for  the  purpose  of  establishing  the 
character  of  the  nuisance ;  he  must  show  injury  to  himself  or  his  household. 
The  damages  he  may  recover  will  be  the  amount  of  depreciation  in  the 
value  of  the  property,  perhaps  fixed  by  the  rental  value,  or  they  will  depend 
upon  the  injury  to  health  or  comfort,  and  the  injury  established  by  the 
evidence  will  ux  this  as  well  as  determine  whether  the  offense  does  exist  to 
an  extent  sufficient  to  constitute  a  nuisance. 

Equity.  In  some  cases,  a  court  of  Equity  will  take  the  case  in  hand, 
and  issue  an  injunction  against  the  continuance  of  a  nuisance. 


PROCURING  BREACH  OF  CONTRACT;    OR  MALICIOUSLY,  A  REFUSAL  TO 

CONTRACT 

Duty  Defined  Breach  of  Contract.  A  duty  exists  not  to  bring  about 
to  another's  injury  a  breach  of  contract,  knowing  one  to  exist.  Originally 
this  had  application  mainly  in  enticing  servants,  and  no  doubt  still  has  use 
in  this  way. 

Apparently  one  is  at  liberty  to  offer  work  to  one  employed  by  another 
and  thus  secure  for  himself  a  desirable  employee,  provided  that  the  em- 
ployee is  not  in  some  way  under  contract.  If  an  engineer  is  under  contract 
to  serve  a  city,  or  other  corporation,  for  six  months  or  a  year,  an  offer  to 
him  which  results  in  his  leaving  his  employer  (breaking  the  contract)  is 
actionable.  Procuring  the  breaking  of  any  other  kind  of  contract  is  equally 
unlawful. 


4-18  TORTS 

Refusal  to  Contract.  A  duty  exists  also  not  to  prevent  by  wrongful 
means  any  one  intending  to  do  so  from  contracting  with  another,  to  the 
latter's  damage.  In  some  states,  malicious  action,  even  when  not  wrong- 
ful, is  sufficient  to  justify  a  suit  at  law. 

Actual  Damages.  It  will  be  noted  that  in  both  the  above  cases  actual 
damage  is  an  element  of  the  legal  wrong.  It  is  doubtful  if  cases  are  often 
brought  to  suit  along  these  lines,  but  it  is  well  to  have  some  understanding 
of  the  law  in  the  matter. 


INFRINGEMENT   OF  PATENT,   TRADEMARK,   OR   COPYRIGHT 

While  engineers  may  have  special  interest  in  this  subject,  space  is  not 
available  for  extended  notice  here.  Statute  laws  cover  the  matter.  A 
publisher  can  be  expected  to  know  the  steps  necessary  to  secure  copy- 
right, and  a  patent  lawyer  is  essential  if  a  patent  is  to  be  secured.  If 
something  more  or  different  from  this  is  needed,  an  examination  of  the 
statute,  and  the  reading  of  a  textbook  on  the  subject  would  seem  to  be 
necessary. 


CHAPTER  V 
EQUITY 

Misconception  as  to  Equity.  Much  misconception  apparently  exists  in 
the  mind  of  the  general  public  as  to  what  Equity  means  when  used  in  con- 
nection with  legal  affairs  or  procedure.  The  opinion  largely  prevails  that 
Equity  is  a  synonym  for  pure  right  and  justice  unrestricted  by  such  rules 
and  precedents  as  have  produced  rigidity  in  the  Common  Law.  In  an 
excellent  engineering  law  textbook  it  is  stated  that :  "  The  less  you  have 
to  do  with  Law,  and  the  more  with  Equity,  the  better/'  This  statement 
tends  to  suggest  to  the  mind  three  errors :  first,  that  the  Common  Law 
largely  works  injustice ;  second,  that  Equity  can  be  asked  to  right  most 
wrongs ;  third,  that  one  has  usually  some  choice  as  to  the  court  to  which 
he  shall  apply.  None  of  these  propositions  is  even  substantially  true. 

Rules  and  Precedents.  Modern  Equity  is  by  no  means  free  from  the 
restrictions  of  rule  and  precedent ;  it  is  necessarily  administered  by  uniform 
rules.  It  is  true  here,  just  as  in  Common  Law,  that  a  failure  to  have 
definite  rules  of  action  laid  down  must  result  in  an  uncertainty  which  would 
prohibit  consistent  lawful  procedure  by  any  individual,  an  uncertainty 
not  to  be  tolerated. 

An  Established  System.  Equity  does  in  fact  rely  upon  precedent ;  its 
principles  are  fixed  and  can  be  changed  only  by  Statute  Law.  It  is  an 
established  system,  in  some  features  as  rigid  as  the  Common  Law,  especially 
as  to  jurisdiction.  Furthermore,  in  this  country,  to  a  very  considerable 
extent,  the  same  judges  try  cases  both  in  Law  and  in  Equity,  sitting  today 
for  Law  cases ;  tomorrow  for  Equity. 

Delay.  As  to  delay,  while  some  earlier  Equity  cases  extended  over  many 
years,  at  present,  in  most  Equity  cases,  more  speedy  justice  can  be  secured 
than  at  Common  Law,  if  either  party  is  duly  insistent.  This  is  especially 
true  in  the  United  States  Courts. 

Hardship.  Sometimes  the  decree  of  a  court  of  Equity,  established  by 
precedent,  even  works  hardship  and  apparent  injustice  to  an  extent  not 
usual  at  Common  Law.  In  the  case  of  water  rights,  an  owner  higher 
up  on  a  stream  will  be  enjoined  from  polluting  the  stream  although  the 
stream  may  sufficiently  purify  itself  so  that  no  material  damage  occurs 

5-1 


5-2  EQUITY 

to  the  owner  below  who,  nevertheless,  secures  an  injunction.  The  offence 
exists  independent  of  any  damage  done  and  requires  a  remedy  lest  it  may 
lead  to  the  acquirement  of  rights  from  which  injury  may  possibly  result 
later. 

Limitations  of  Common  Law.  In  the  development  of  the  Common 
Law,  it  came  about  that  the  remedy  was  commonly  the  award  of  money 
damages,  although  in  some  cases  property,  real  or  personal,  was  restored  to 
the  owner.  The  forms  of  action  were  also  limited.  It  was  further  true 
that  in  some  cases  the  legal  title  to  property  rested  in  one  person,  while  the 
real  beneficial  interest  rested  in  another ;  that  certain  rights  existed  which 
needed  protection  and  which  the  Common  Law  did  not  at  all  recognize. 

Origin  of  Equity  Jurisdiction.  In  earlier  days,  it  became  the  custom, 
after  a  time,  when  the  Common  Law  failed  to  meet  the  case,  to  address  a 
petition  to  the  King  who  was  recognized  as  the  fountain  of  justice;  a 
residuum  of  justice  not  secured  by  the  Common  Law  was  assumed  to  rest 
in  him.  The  procedure  was  to  have  these  petitions  referred  to  the  Privy 
Council,  where  they  were  settled  by  the  Lord  Chancellor.  Later  a  Court 
of  Chancery  or  Equity  performed  these  duties  and  the  foundation  of 
Equity  jurisprudence  became  established.  This  differed  materially  from 
that  of  the  Common  Law.  In  the  final  outcome  courts  of  Law  and  of 
Equity  existed  side  by  side,  with  no  substantial  overlapping  of  action  or 
jurisdiction. 

Kind  of  Relief  Granted.  The  relief  granted  by  the  court  of  Equity  in 
certain  classes  of  cases  was  intended  to  put  the  person  wronged  (or  immi- 
nently liable  to  suffer  a  wrong)  in  the  same  position  he  was  before  the  wrong 
was  committed  (or  in  a  position  he  was  entitled  to,  by  preventing  the  wrong 
from  occurring).  The  court  was  invested  with  power  to  command  things 
to  be  done  (or  not  to  be  done),  and  in  this  way  to  remedy  defects  in  the 
Common  Law.  Thus  was  created  the  important  remedy  of  injunction,  a 
command  not  to  do  some  improper  act ;  and  the  similar  remedy  of  man- 
damus, which  positively  directs  some  act  to  be  done. 

Equitable  Rights.  It  has  been  seen  that  certain,  but  not  all,  wrongs  were 
recognized  by  the  Common  La.w  as  torts.  In  a  similar  way  certain  specific, 
but  legally  incomplete,  rights  were  found  to  be  worthy  and  capable  of 
protection.  These  rights  or  interests  did  not  rest  on  a  complete  legal 
title,  so  that  the  Common  Law  failed  to  reach  them ;  some  of  these  were 
connected  with  trusts.  They  came  to  be  recognized  as  "  equitable  rights." 

System  of  Equity  Jurisprudence.  The  two  important  functions  of 
Equity  are  the  recognition  of  titles  and  of  rights  not  known  to  the  Common 
Law,  and  the  application  of  remedies  not  provided  by  the  Common  Law. 
Under  the  system  of  Equity  jurisprudence  which  has  grown  up,  certain 
rights  are  recognized  which  are  outside  the  sphere  of  action  of  a  court  of 


EQUITY  5-3 

Law;  certain  offences  are  especially  recognized  as  justifying  jurisdiction 
by  a  court  of  Equity ;  and  in  many  cases  the  relief  granted  by  a  court  of 
Law  is  so  inadequate  that  the  court  of  Equity  is  sought  because  it  has  power 
to  grant  relief  in  forms  not  exercised  by  courts  of  Law.  It  is  not  often  that 
a  court  of  Equity  will  take  action  contrary  to  that  which  a  court  of  Law 
would  take  in  the  same  case.  It  is  largely  true  that  any  specific  wrong 
must  seek  its  appropriate  remedy  in  one  court  or  the  other,  but  usually 
without  any  choice  as  to  which  it  shall  be. 

Flexibility  of  Remedies.  Among  the  features  which  mark  the  differ- 
ence between  Law  and  Equity,  the  greater  flexibility  in  the  remedy  is 
probably  of  the  greatest  importance ;  specific  performance  of  contract,  and 
injunction  to  prevent  wrong  or  require  right  action,  are  particular  examples. 
While  a  case  at  Common  Law  is  a  two-sided  controversy,  Equity  takes 
care  of  cases  where  there  are  numerous  parties,  each  with  distinct  interests. 
The  award  of  a  court  of  Equity  is  in  the  form  of  a  decree  directing  what  shall 
be  done,  not  always  by  one  of  the  parties,  but  often  by  his  opponent  also, 
or  by  several  when  many  interests  are  involved.  There  is  thus  afforded 
opportunity  for  a  more  even  balance  of  justice  than  in  a  court  of  Law  where 
there  is  simply  an  award  either  of  money  or  of  specific  property  to  one  or 
the  other  of  the  two  parties  to  the  controversy. 

Procedure.  The  procedure  in  Equity  differs  materially  from  that  at 
Common  Law.  In  Equity  the  statement  of  the  plaintiff's  cause  of  action, 
which  is  called  a  "  bill,"  is  filed  in  court,  and  thereupon  a  subpoena  is 
issued  for  the  defendant  to  appear  and  answer.  The  defendant  puts  in  an 
"  answer  "  which  is  sometimes  under  oath,  and  such  an  answer  under  oath 
is  taken  to  be  true  to  an  extent  such  that  if  disputed,  it  can  be  overcome 
only  by  the  testimony  of  two  witnesses,  or  of  one  witness  and  corroborating 
circumstances. 

Evidence.  The  rules  of  evidence  in  Equity  are  the  same  as  in  Law, 
but  the  method  of  taking  it  is  different ;  in  Equity  it  is  reduced  to  writing, 
and  forms  a  part  of  the  record  of  the  case.  The  function  of  evidence, 
however,  is  different  in  the  two  cases ;  in  Law,  evidence  is  directly  the 
means  by  which  a  jury  determines  the  issues  raised  in  the  pleadings ;  in 
Equity  it  is  the  machinery  by  which  the  facts  in  the  case  are  brought  before 
the  judge,  whose  duty  it  is,  in  Equity  procedure,  to  determine  the  facts. 

Juries  Sometimes  Used.  In  some  cases  issues  of  fact  are  framed  by 
consent  of  the  court,  to  be  determined  by  a  jury.  Whether  a  jury  is  used 
to  find  such  issues  of  fact  is  not  a  matter  of  right  but  is  within  the  discre- 
tion of  the  judge.  Where  a  jury  is  not  used  the  probability  of  unwise  or 
unfair  action  is  lessened  since  it  is  confined  to  errors  of  the  judge,  and  these, 
if  made,  are  more  readily  corrected  if  an  appeal  is  made  to  a  higher  court 
for  review. 


5-4  EQUITY 

Engineers'  Relations  to  Pleadings.  It  is  perhaps  more  important  in 
Equity  than  in  Law  that  the  evidence  available  should  be  known  to  the 
lawyer  who  draws  up  the  papers  either  for  the  plaintiff  or  the  defendant ; 
the  drawing  of  the  papers,  the  pleadings,  is  a  more  critical  matter  in  Equity 
than  in  Law,  and  it  is  important  that  the  engineer  should  read  these  papers 
carefully  and  ask  questions  if  need  be,  certainly  before  he  signs  or  swears 
to  them,  not  only  as  to  facts  asserted  but  also  as  to  whether  the  remedy 
asked  for  is  as  complete  and  adequate  as  it  should  be.  Any  intelligent  man 
may  in  that  way  be  a  valuable  check  upon  almost  any  lawyer. 


EQUITY  JURISDICTION 

Essentials  of  Jurisdiction.  In  order  that  a  suit  may  be  brought  in  a 
court  of  Equity  rather  than,  as  commonly  phrased,  a  court  of  Law,  it  is 
essential  that  there  shall  be  no  adequate  remedy  at  Common  Law.  Either 
the  Law  remedy  fails  to  effect  a  full  measure  of  justice,  or  the  rights  or 
titles  involved  are  not  recognized  at  Law.  The  latter  condition  occurs 
in  the  case  of  trusts,  where  the  substantial  interest  lies  with  one  party  while 
the  title  rests  in  another ;  and  the  same  is  true  with  mortgages.  In  the 
former  class  are  contracts ;  if  an  award  in  money  is  an  adequate  remedy, 
a  court  of  Equity  will  not  interfere ;  where  "  specific  performance  "  of  the 
contract  is  necessary  to  secure  justice,  a  court  of  Equity  only  may  assume 
jurisdiction.  Similarly  with  torts,  if  an  award  in  money  will  not  effect  a 
reasonable  remedy,  a  court  of  Equity  may  assume  jurisdiction  and  issue 
an  injunction  to  put  a  stop  to,  or  prevent  the  beginning  of  an  injury ;  this 
is  true  as  to  fraud,  trespass,  and  nuisance.  When  there  are  diverse  interests 
involved,  one  of  which  must  suffer  if  a  Law  remedy  is  followed,  a  court  of 
Equity  will  sometimes  appoint  a  receiver  in  an  effort  to  protect  the  various 
interests. 

Multiplicity  of  Suits.  Resort  is  also  had  to  a  court  of  Equity  in  order 
to  avoid  a  multiplicity  of  suits,  which  may  result  either  from  an  offence 
recurring  or  from  an  offence  in  which  a  number  of  persons  are  involved, 
whether  as  plaintiffs  or  defendants.  While  the  courts  in  some  cases  seem 
jealous  of  their  rights  and  refuse  to  allow  agreements  to  be  made  to  dis- 
pense with  a  court  trial,  and  thus  "  oust  the  jurisdiction  of  the  court," 
in  this  case  protection  is  given  against  an  undue  amount  of  litigation.  The 
law  in  both  cases  seems  wise  and  just. 

Kind  of  Right  to  be  Remedied.  In  order  that  Equity  jurisdiction  shall 
apply,  the  right  must  be  one  of  which  municipal  law  takes  cognizance,  and 
not  merely  moral  law.  Not  only  will  Equity  not  afford  relief  where  there 
has  always  been  a  full,  adequate,  and  complete  remedy  at  Law ;  but  it  also 
will  not  give  a  remedy  in  direct  contravention  of  Common  Law. 


EQUITY  5-5 

Titles,  Rights,  Remedies.  The  domain  of  Equity  may  be  considered  to 
embrace  three  important  heads;  equitable  titles,  equitable  rights,  and 
equitable  remedies. 

Under  equitable  rights  are  accident  and  mistake,  fraud,  notice,  estoppel, 
election,  conversion  and  reconversion,  adjustment,  liens,  and  unconscion- 
able stipulations. 

Under  equitable  remedies  we  find  specific  performance,  injunctions, 
re-execution,  reformation,  rescission,  cancellation,  account,  partition, 
partnership  bills,  creditors'  bills,  administration  suits,  discovery,  receivers, 
protection  of  infants  and  other  incompetents,  and  quieting  title. 

No  attempt  will  be  made  here  to  cover  fully  the  lists  given  above. 

Maxims.  As  a  part  of  Equity  practice  there  have  come  into  existence 
a  series  of  maxims  : 

There  is  no  right  without  a  remedy. 

Equity  follows  the  Law. 

Equity  aids  the  vigilant,  not  those  who  slumber  on  their  rights. 

Between  equal  equities,  the  Law  will  prevail. 

Equality  is  Equity. 

He  who  comes  into  Equity  must  come  with  clean  hands. 

He  who  seeks  Equity  must  do  Equity. 

Equity  looks  upon  that  as  done  which  ought  to  be  done. 

Between  equal  equities,  priority  of  time  will  prevail. 

Equity  imputes  an  intention  to  fulfil  an  obligation. 

Equity  acts  in  personam  not  in  rem. 

Equity  acts  specifically. 

Equity  regards  substance  rather  than  form. 

There  is  hardly  opportunity  for  extended  explanation  or  discussion  of 
these  maxims,  whose  applications  and  value  will  develop  at  the  conference 
with  the  lawyer  in  case  of  a  suit  in  Equity. 

TRUSTS 

Definitions.  For  one  reason  or  another  it  is  not  uncommon  for  someone 
to  put  into  the  possession  of  a  second  party,  property  not  intended  for 
the  latter's  own  use  but  for  the  benefit  or  use  of  a  third  party.  The  second 
party  then  holds  the  property  in  trust  for  the  third  party,  or  beneficiary, 
who  is  called  the  "  cestui  que  trust  "  while  the  second  party  is  the  "  trustee." 
Smith  conveys  to  Jones  lands  and  securities  to  be  held  for  the  benefit  of 
Smith's  minor  son.  Jones  is  to  pay  to  Smith's  son  interest  on  the  securi- 
ties yearly,  and  when  the  son  is  of  age,  is  to  convey  to  him  all  the  lands  and 
securities.  It  is  evident  that  the  title  and  possession  rest  in  the  hands  of 
the  trustee,  who,  however,  has  no  real  interest  in  the  property ;  the  real 


5-6  EQUITY 

party  in  interest  is  Smith's  son,  the  cestui  que  trust.  The  Common  Law 
looks  to  the  legal  title  (sometimes  to  possession),  and  the  cestui  que  trust 
must  go  to  the  court  of  Equity  if  his  intangible  interest  needs  protection, 
as  it  may,  if  the  trustee  fails  in  any  considerable  degree  in  his  duty  under 
the  trust. 

Express  Trusts.  Trusts  may  be  express  or  implied.  Where  a  trust  is 
to  be  expressly  created,  a  lawyer  should  be  consulted ;  there  are  sufficient 
technicalities  involved  to  make  such  procedure  not  only  wise,  but  sub- 
stantially necessary,  in  most  cases.  An  express  trust  is  often  created  by 
the  provisions  of  a  will. 

The  subject  of  trusts  has  little  interest  to  engineers  except  that  anyone 
having  important  dealings  with  a  trustee  under  an  express  trust  should 
know  the  terms  of  the  trust,  as  the  trustee's  powers  are  limited  to  those 
created  by  the  deed  of  trust ;  consultation  with  a  lawyer  is  often  advisable. 
Where  registered  bonds,  or  securities  in  the  form  of  stock,  are  transferred 
by  a  trustee,  it  is  customary  now  for  corporations  to  require  the  filing  of  a 
certified  copy  of  the  deed  of  trust,  an  inconvenience  not  always  anticipated 
by  the  trustee  at  the  time  of  purchase. 

Trustee's  Duties.  A  trustee  under  an  express  trust  is  held  to  high  stand- 
ards of  conduct  and  performance.  He  cannot  properly  act  in  any  trans- 
action where  his  personal  interests  may  conflict  with  those  of  the  cestui 
que  trust.  In  his  investment  of  trust  funds,  conservative  action  is  de- 
manded ;  a  somewhat  recognized  standard  requires  that  securities  bought 
by  a  trustee  be  such  as  are  legally  authorized  for  purchase  by  savings 
banks.  This  rigid  standard  would  not  always  be  insisted  on.  A  trustee 
may  be  held  pecuniarily  responsible  in  case  of  ill-advised  and  unprofitable 
investments. 

Implied  Trusts.  Implied  trusts  result  when  in  some  transactions  the 
title  and  the  beneficial  interests  rest  in  different  parties,  or  where  a  trustee 
has  acquired  personal  title  contrary  to  his  duties  as  trustee.  This  class  of 
trusts  seems  not  to  demand  special  attention  here. 

MORTGAGES 

Definition.  When  a  person  wants  to  borrow  money,  it  is  common  to 
require  some  form  of  security  or  pledge  for  payment  of  the  debt.  When 
the  security  is  real  estate,  the  common  procedure  is  for  the  borrower  or 
mortgagor  to  make  a  note  and  also  to  execute  a  "  mortgage  deed  "  in  favor 
of  the  lender  or  mortgagee,  as  security  for  the  note.  Commonly  this 
mortgage  deed  is  in  form  a  deed  "  in  fee  simple  "  to  the  mortgagee,  but 
with  a  stipulation  that,  in  case  the  debt  or  loan  shall  be  paid  on  a  certain 
date  specified,  the  mortgagor  shall  be  entitled  to  a  reconveyance,  or  release 


EQUITY  5-7 

of  mortgage ;  but  in  case  of  failure  to  pay,  the  property  under  the  Common 
Law  became  the  property  of  the  mortgagee.  The  chapter  on  real  property 
should  be  read  to  understand  the  nature  of  deeds  and  estates. 

Equity  of  Redemption.  The  value  of  the  property  is  almost  always  in 
excess  of  the  debt,  and  the  law  has  looked  upon  the  forfeiture  of  this  excess 
as  a  penalty,  and  a  penalty  is  commonly  regarded  with  disfavor  by  the 
law.  The  Common  Law  as  it  formerly  stood,  exacted  the  letter  of  the 
deed.  The  interest  of  the  mortgagor  in  this  excess  seemed  an  interest 
which  a  court  of  Equity  could,  and  did  recognize  and  protect.  This  inter- 
est is  called  the  "  equity  of  redemption,"  and  by  virtue  of  it,  under  the 
earlier  law,  the  mortgagor  had  the  right  at  any  time  within  twenty  years 
to  redeem  the  property  by  paying  the  debt  with  interest.  Under  fore- 
closure proceedings,  or  as  the  result  of  Statute  Law,  this  right  is,  practically, 
never  exercised. 

An  Estate.  The  courts  have  held  this  equitable  interest  to  be  an 
"  estate  "  which  may  be  conveyed,  or  devised  by  will,  or  go  to  the  heir  by 
descent.  It  is  an  estate  under  which  the  mortgagor  retains  possession  or 
control,  may  lease,  collect  rents,  and  exercise  substantially  all  of  the  func- 
tions of  ownership ;  this  is  by  virtue  of  the  equitable  title  which  rests  in 
the  mortgagor,  while  the  legal  title  is  held  by  the  mortgagee.  The  mort- 
gage now  is  held  to  be  essentially  a  lien  on  the  property.  The  law  does  not 
allow  the  mortgagor  to  part  with  this  equity  of  redemption  to  the  mort- 
gagee at  the  time  of  executing  the  mortgage,  nor  at  any  later  time,  without 
consideration,  and  this  a  court,  in  many  States,  will  insist  shall  be  actual 
and  real. 

Foreclosure.  Equity  thus  gives  protection  to  the  mortgagor,  but  it  also 
looks  after  the  interests  of  the  mortgagee.  The  mortgage  deed  commonly 
contains  a  provision  for  "  foreclosure  "  of  the  mortgage,  under  which  a 
court  of  Equity  arranges  for  a  sale  of  the  property  for  the  payment  to  the 
mortgagee  of  all  that  is  due  him  and  for  the  return  to  the  mortgagor  of 
the  excess,  after  the  payment  of  proper  costs  and  fees,  so  that  a  reason- 
ably prompt  remedy  is  provided.  The  equity  of  redemption,  when  this  is 
done,  ceases  to  exist. 

In  this  country,  in  part  through  statutory  enactments,  Common  Law 
jurisdiction  is  now  exercised  over  these  matters  in  many  States. 

ASSIGNMENT 

Scope  of  Assignment.  Under  the'Common  Law,  things  not  in  posses- 
sion, perhaps  not  fully  in  existence,  could  not  be  transferred  or  assigned. 
A  court  of  Equity,  however,  will  enforce  such  transfers  or  assignments  in 
many  cases. 


5-8  EQUITY 

A  chance  or  possibility  of  acquiring  an  estate  in  lands  is  assignable.  The 
share  which  a  sailor  will  have  in  the  profits  of  a  voyage  in  fishing  or  whaling 
is  assignable  before  the  beginning  of  the  voyage.  A  workman  may  assign 
his  wages  in  advance  unless  some  statute  forbids.  If  a  person  agrees,  for  a 
consideration  paid,  to  sell  property  at  that  time  not  acquired,  a  court  of 
Equity  will  enforce  the  contract  if  the  person  later  secures  the  property. 
A  manufacturer  assigns  machinery  not  fully  in  existence  to  the  purchaser 
who  makes  payment  for  it ;  when  completed,  creditors  of  the  manufacturer 
attach  it ;  the  original  purchaser  will  be  granted  the  property. 

Assignments  for  the  benefit  of  creditors  are  regulated  by  statute  in  most 
States  and  will  not  receive  attention  here. 


ACCIDENT  AND   MISTAKE 

Accident  Defined.  When  a  document  or  paper  is  destroyed  by  accident, 
due  perhaps  to  the  "  act  of  God,"  but  certainly  not  due  to  the  serious 
negligence  or  fault  of  the  person  entitled  to  its  possession,  and  when  the  loss 
obstructs,  or  imperils  the  future  assertion  of  rights  dependent  upon  such 
possession,  Equity  may  be  called  upon  to  give  relief  on  account  of  this 
"  accident."  Where  a  construction  bond,  not  in  duplicate,  is  lost  by  acci- 
dent a  court  of  Equity  may  order  a  re-execution  of  the  instrument,  and 
similar  action  may  be  taken  in  case  of  a  lost  deed,  or  of  other  important 
documents.  Where  a  penalty  or  forfeiture  is  provided  for  a  failure  to  act  or 
to  respond  within  a  definite  period  of  time,  if  the  failure  has  occurred  through 
"  accident  "  and  without  negligence'or  fault,  Equity  will  give  relief  against 
the  enforcement  of  the  penalty  or  forfeiture,  but  not  where  a  money  payment 
only  is  involved.  Cases  may  occur  in  engineering  work  where  a  failure  to 
execute  work  at  the  appointed  time  would  work  forfeiture  in  some  way, 
except  that  the  element  of  accident  intervened. 

Negotiable  Instruments.  The  loss  of  a  negotiable  instrument  is  a  differ- 
ent matter,  for  that  is  good  in  the  hands  of  any  innocent  holder  for  value,  as 
will  appear  in  a  later  chapter. 

Mistake.  Equity  will  also  give  relief  in  some  cases  of  "  mistake  " ; 
but  this  must  be  a  mistake  of  fact,  and  not  of  law.  A  mistake  as  to  the 
legal  effect  of  an  instrument  is  an  apparent  exception,  and  Equity  will  give 
relief  in  this  case. 

The  mistake  must  be  mutual,  material,  and  not  induced  by  negligence, 
if  a  writing  is  to  be  re-formed.  The  mistake  may  be  due  to  failure  to  prop- 
erly express  what  was  intended  in  a  deed  or  other  writing ;  it  may  occur 
through  misapprehension  or  ignorance  of  some  important  fact.  A  failure 
to  write  "  with  interest  "  in  a  note,  when  this  was  intended,  has  been  cor- 
rected. When  both  parties  intended  an  instrument  to  be  under  seal,  an 


EQUITY  5-9 

omission  to  attach  seals  has  been  held  to  be  a  "  mistake,"  to  be  rectified 
by  a  court  of  Equity.  An  agreement  may,  of  course,  be  rescinded  for 
fraud. 

Engineer's  Interest  in  Mistake.  Engineers  have  a  definite  interest  in 
the  case  where  error  appears  on  the  face  of  an  award,  or  where  an  arbitrator 
shows  or  admits  circumstances  constituting  "  mistake."  The  services 
of  a  lawyer  are  necessary  in  cases  where  accident  and  mistake  are  to  be 
rectified  and  his  advice  thus  becomes  available  before  any  action  need  be 
taken  by  an  engineer. 

FRAUD 

Relief  in  Equity.  Common  Law  often  affords  sufficient  relief  in  many 
cases  of  fraud.  Fraud  vitiates  a  contract ;  fraud  also  constitutes  a  tort, 
and  damages  may  be  awarded  at  Common  Law  if  a  suit  instituted  is  suc- 
cessful. While  there  is  thus  some  measure  of  relief  in  Law,  the  remedies 
often  fail  to  put  the  party  in  as  good  a  position  as  before  the  fraud  was 
committed,  so  that  a  court  of  Equity  may  properly  assume  jurisdiction. 
If  a  legal  title  has  passed  due  to  fraud,  Equity  may  regard  the  holder  of 
the  title  as  a  trustee  for  the  benefit  of  the  grantor,  or  may  set  aside  the 
deed,  as  has  been  stated.  A  contract  may  be  set  aside  for  actual  fraud, 
and  also  in  the  case  of  constructive  fraud,  where  for  instance  one  has  taken 
advantage  of  another  where  confidential  relations  exist  between  them,  as  in 
the  case  of  guardian  and  ward,  attorney  and  client,  trustee  and  cestui  que 
trust;  the  decree  of  a  court  of  Equity  may  go  far  to  right  the  wrong  and 
place  the  party  aggrieved  in  a  position  nearly  or  quite  as  good  as  before 
the  fraud  was  committed. 

Fiduciary  Character  of  Engineer.  If  an  engineer  unwittingly  mis- 
leads a  contractor  as  to  matters  preliminary  to  a  contract,  the  relation  of 
engineer  to  contractor  is  likely  to  be  held  by  the  courts  to  have  sufficiently 
the  fiduciary  character  to  make  it  a  case  of  constructive  fraud,  as  has  been 
suggested  elsewhere. 

ESTOPPEL 

Definition.  When  A,  by  statement  or  action,  has  led  B  to  do  certain 
acts,  a  court  of  Equity  will  sometimes  refuse  to  allow  A  to  make  a  counter 
statement,  however  true  it  may  be,  when  such  a  statement  would  lead  to 
injustice  or  loss  to  B ;  even  silence  in  some  cases  has  the  same  effect  as  a 
positive  act.  This  action  is  taken  under  the  doctrine  of  estoppel.  The 
point  of  view  of  some  law  writers  is  that  the  attempted  action  amounts 
to  constructive  fraud.  When  estoppel  may  be  set  up  as  a  defence  is  a 
matter  for  the  lawyer  finally,  but  that  such  a  remedy  sometimes  exists  is  a 
fact  perhaps  worth  knowing. 


5-10  EQUITY 


NOTICE 

Definition.  Notice  is  of  two  kinds,  actual  and  constructive.  Actual 
notice  is  knowledge ;  constructive  notice  occurs  where  facts  brought  to  a 
man's  knowledge  are  such  that  a  diligent,  sagacious,  and  prudent  man 
ought  to  make  inquiry  concerning  them ;  a  neglect  to  make  such  inquiry 
makes  him  liable  for  the  consequences. 

Examples.  A  general  knowledge  that  property  about  to  be  bought  by 
a  man  is  in  some  way  encumbered  is  constructive  notice  which  requires 
inquiry  on  his  part.  Knowledge  of  unrecorded  encumbrances  has  the 
same  effect.  An  avoidance  of  inquiry  may  have,  similarly,  the  effect  of 
constructive  notice,  if  clearly  established  by  evidence.  A  general  lack  of 
caution,  not  connected  with  any  specific  matter,  has  not  the  same  effect. 

A  person  buying  property  under  litigation  has  constructive  notice, 
although  he  has  no  actual  knowledge  of  such  litigation ;  he  buys  subject 
to  any  decree  against  the  party  from  whom  he  buys.  In  some  States  a 
formal  statement  of  such  litigation  must  be  filed  with  the  registry  of  deeds 
to  constitute  notice.  A  purchaser  has  constructive  notice  of  the  registra- 
tion of  instruments ;  not  only  of  the  fact  of  registration  but  of  the  contents 
of  the  instrument. 


CONTRIBUTION,   EXONERATION,   SUBROGATION 

Contribution.  In  the  case  of  contract  bonds  or  other  debts  where  several 
parties,  possibly  sureties,  are  liable  for  a  common  debt  and  one  pays  the 
entire  obligation,  Equity  will  give  to  the  one  who  pays,  the  right  to  recoup 
from  the  others  their  proportional  share,  under  the  name  of  "  contribution." 

Exoneration.  In  a  similar  way  a  surety  who  has  paid  a  debt  may  look 
to  his  principal,  perhaps  the  contractor,  for  reimbursement,  probably 
including  the  costs  of  the  suit,  as  "  exoneration."  It  is  likely  to  happen 
that  the  city  or  the  railroad  finds  it  more  satisfactory  to  collect  from  the 
surety  than  from  the  contractor  directly  where  both  have  signed  the  bond ; 
the  surety  then  needs  a  remedy  against  the  contractor  which  the  Common 
Law  does  not  adequately  provide. 

Subrogation.  Somewhat  technically  subrogation  is  the  substitution  of 
one  creditor  for  another.  In  a  broad  sense,  it  is  sometimes  considered  to 
be  the  means  by  which  contribution  and  exoneration  are  effected.  In  a 
narrower  sense,  it  is  held  to  apply  especially  in  the  case  where  one  surety, 
or  the  principal,  has  collateral  security  for  the  debt,  in  which  case  Equity 
will  provide  that  the  obligation  be  met  by  the  one  in  possession  of  the 
securities. 


EQUITY  5—11 

RESCISSION,   CANCELLATION 

Rescission.  There  is  necessity  sometimes  for  setting  aside  some  docu- 
ment or  writing  either  because  it  was  obtained  by  fraud  or  otherwise  it 
ought  not  to  stand.  Such  a  case  occurs  when  the  legal  title  to  lands  has 
improperly  passed  by  deed  and  where  a  money  award  will  not  set  matters 
right.  Resort  must  then  be  had  to  a  court  of  Equity  for  "  rescission  "  of 
the  contract  or  deed.  Any  part  performance  by  the  plaintiff  after  dis- 
covering the  fraud  or  wrongful  act,  seems  to  affirm  the  contract  and  is 
fatal  to  the  suit.  The  maxim  "  He  who  seeks  Equity  must  do  Equity  " 
finds  application  here.  The  plaintiff  who  asks  rescission  must  tender 
everything  he  has  received,  so  as  to  put  the  defendant  in  as  good  position 
as  before,  so  far  as  possible.  Where  in  the  nature  of  things  it  is  impossible 
to  approximate  to  this,  the  court  will  refuse  to  interfere. 

Cancellation.  Somewhat  similarly,  a  court  of  Equity  will  decree  the 
"  cancellation  "  of  an  instrument  obtained  by  fraud  or  otherwise  invalid, 
in  cases  where,  while  a  good  defence  exists  at  present,  the  evidence  of  its 
invalidity  might  later  be  unavailable.  This  remedy  is  an  extraordinary 
one,  to  be  secured  only  under  expert  advice.  A  suit  to  clear  title  to  land 
where  some  cloud  exists  on  the  title  is  a  remedy  of  a  similar  sort. 

To  Perpetuate  Testimony.  There  are  other  cases  where  the  assistance 
of  Equity  may  be  asked  in  order  to  perpetuate  testimony  which  may  later 
become  unavailable. 

SPECIFIC  PERFORMANCE  OF  CONTRACT 

Specific  Performance.  Equity  assumes  jurisdiction  in  the  case  of 
contracts  only  when  the  Common  Law  remedy  fails  or  is  inadequate.  In 
the  case  of  a  breach  of  contract  the  ordinary  remedy  is  a  suit  at  Common 
Law  for  damages,  a  favorable  outcome  resulting  in  a  money  award  which 
in  some  cases  is  an  inadequate  remedy.  A  man  secures  from  several  owners 
contracts  in  writing  to  convey  parcels  of  land  to  him ;  one  of  the  owners 
refuses  or  otherwise  fails  to  convey;  all  the  parcels  of  land  are  neces- 
sary if  the  projected  hotel,  or  business  block,  or  church  is  to  be  built ;  it  is 
impossible  to  secure  a  money  award  which  will  make  the  purchaser  whole. 
In  this  case  recourse  is  had  to  a  court  of  Equity  to  secure  specific  perform- 
ance of  contract,  a  well  recognized  remedy  of  Equity.  Specific  performance 
of  contract  deals  as  a  rule  only  with  lands,  real  property  rather  than  per- 
sonal, although  where  the  personal  property  is  of  a  unique  character  it  may 
apply  even  then.  It  applies  also  when  the  goods  cannot  be  acquired  in 
the  open  market  if  money  damages  are  awarded.  The  remedy  of  specific 
performance  is  appropriate  also  in  some  cases  where  the  damages  cannot 


5-12  EQUITY 

be  satisfactorily  ascertained,  and  where  part  performance  has  already  been 
done. 

Within  Discretion  of  the  Court.  The  granting  of  a  decree  for  specific 
performance  is  not  regarded  as  a  right  in  all  cases,  but  often  as  resting 
within  the  sound  discretion  of  the  court ;  and  although  this  follows  in  some 
sense  from  precedent,  yet  if  the  contract  seems  unconscionable  or  vague, 
or  if  otherwise  the  court  thinks  it  ought  not  in  equity  and  good  conscience 
to  grant  a  decree,  it  will  refuse  to  interfere,  leaving  open  such  remedy  as 
the  Common  Law  affords.  It  is  true,  in  general,  that  a  court  of  Equity 
will  not  grant  a  decree  which  it  is  unable  to  enforce. 

Money  Awards.  Cases  may  occur  in  which  Equity  jurisdiction  is 
duly  acquired,  but  specific  performance  is  found  impossible ;  in  such  case  a 
court  of  Equity  will  not  hesitate  to  award  money  damages,  if  this  can  be 
done  with  justice  to  the  defendant.  It  is,  in  fact,  not  uncommon  to  award 
money  damages  as  a  part  of  the  relief  sought,  in  connection  with  other 
purely  equitable  relief  which  justifies  a  court  of  Equity  in  assuming  juris- 
diction. 

UNCONSCIONABLE  STIPULATIONS 

Penalties  or  Forfeitures.  Equity  protects  not  only  against  fraud  but 
also  against  the  rapacity  of  a  party  toward  another  with  whom  he  has  a 
contract,  when  the  latter  has  failed  in  performance  of  some  unconscionable 
provision  which  subjects  him  to  forfeiture  or  penalty.  Equity  will  grant 
relief  against  the  consequences  of  such  provision  as  to  penalty  or  forfeiture. 
Penalties  are  abhorrent  in  the  eyes  of  the  law,  and  the  court  of  Equity  will 
relieve  against  the  penalty,  and  may  either  make  a  decree  awarding  the 
damages  actually  suffered,  or  leave  the  question  to  be  settled  at  Common 
Law,  depending  upon  the  relief  sought.  The  question  of  "  liquidated 
damages  "  or  of  "  penalty  "is  of  special  interest  to  engineers,  but  is  dis- 
cussed in  a  later  chapter  on  additional  contract  forms. 

RECEIVERS 

Definition.  A  receiver  is  often  a  person  appointed  by  the  court  upon 
application  of  an  interested  party  to  assume  control  of  property  in  order 
to  protect  the  interests  of  some  party  who  does  not  otherwise  have  com- 
plete and  certain  title  and  control  of  the  property.  Sometimes  two  or 
more  parties  have  interests  not  readily  protected  except  when  in  the  hands 
of  some  impartial  party.  Sometimes  a  receiver  is  appointed  where  inter- 
ests are  in  doubt  and  pending  their  determination.  The  receiver  appointed 
is  an  officer  of  the  court,  looks  to  it  for  instructions,  and  accounts  to  it  for 
his  doings  with  the  property  entrusted  to  him. 


EQUITY  5—13 

Railroad  Receiverships.  A  common  case  of  receivership  is  that  of  a 
railroad  which  has  issued  bonds  as  security  for  money  borrowed  to  help  in 
building ;  the  stockholders  also  have  contributed  money  and  are  in  posses- 
sion of  the  property  and  operate  it.  Whatever  of  net  earnings  is  left  after 
paying  the  interest  on  the  bonds,  is  available  for  dividends  to  the  stock- 
holders who  thus  are  alone  interested  in  the  measure  of  success  of  the  busi- 
ness, so  that  normally  the  railroad  operation  is  and  should  be  conducted 
with  a  view  to  their  advantage.  If  the  earnings  are  for  a  time  insufficient 
to  pay  interest  on  the  bonds,  the  stockholders'  prospect  of  dividends, 
temporarily  at  least,  is  wiped  out. 

Bondholders'  Interest.  The  bondholders  then  become  the  real  parties 
involved  in  the  success  of  operation;  when  interest  on  the  bonds  is  not 
paid,  foreclosure  becomes  possible,  although  this  is  not  to  the  advantage 
either  of  the  bondholders  or  of  the  stockholders.  A  receivership  is  peti- 
tioned for  by  the  bondholders,  and  the  receiver  appointed  conducts  opera- 
tions primarily  for  the  benefit  of  the  bondholders  who  commonly  hold  a 
mortgage  on  the  property,  but  also  with  due  regard  for  the  stockholders 
who  still  hold  an  equitable  interest,  which  under  skilful  management  may 
again  become  tangible  and  active. 

Friendly  Receiverships.  Where  such  an  outcome  seems  probable,  the 
court  of  Equity  has  often  appointed  the  president  of  the  road,  in  what  is 
called  a  friendly  receivership;  for  if  the  business  is  conducted  so  as  to 
ultimately  restore  the  interests  of  the  stockholders,  the  bondholders  who 
have  a  prior  security  will  clearly  be  protected,  while  the  spirit  of  the  law 
is  fully  complied  with,  with  due  regard  for  the  rights  of  all. 

INJUNCTION 

Definition.  An  important  remedy  is  "  injunction,"  sometimes  defined 
as  a  remedial  writ  commanding  one  to  do,  or  refrain  from  the  commission 
of,  some  specified  act ;  thus  it  may  be  mandatory  or  prohibitory.  More 
commonly,  but  not  always,  the  form  is  prohibitory  even  when  the  result  is 
substantially  to  dictate  a  positive  action.  When  anyone  enjoins  or  restrains 
another  from  retaining  possession  of  certain  goods  from  the  owner,  his 
neighbor,  the  action  is  negative ;  as  a  result  he  gives  them  up  to  his  neigh- 
bor, a  positive  action.  One  may,  however,  directly  and  positively  be  com- 
pelled to  restore  water  to  its  former  channel,  or  to  abate  a  nuisance.  The 
remedy  of  injunction  is  directed  towards  preventing  the  beginning  or  the 
continuance  of  a  wrongful  and  harmful  action,  while  the  Common  Law 
remedy  can  at  best  only  secure  reparation.  It  is  in  this  way  one  of  the 
most  valuable  of  the  remedies  of  Law  or  Equity ;  in  practice  it  is  also  the 
most  prompt,  effective,  and  complete.  Injunctions  in  the  first  instance 


5-14  EQUITY 

are  usually  temporary,  to  be  dismissed  or  made  permanent  after  a  later 
hearing  on  the  merits.  An  apparently  good  prima  facie  case  must  be 
shown  in  order  to  secure  even  a  temporary  injunction. 

Prevention  of  Torts.  It  may  be  used  in  many  cases  for  the  prevention 
of  threatened  or  reasonably  apprehended  torts.  After  a  tort  has  been 
committed,  but  not  before,  the  Common  Law  awards  damages.  Where 
a  tort  has  been  repeated  and  will  be  further  repeated,  a  court  of  Equity 
will  often  make  an  award  to  cover  the  whole  case,  past  and  future,  in  order 
to  avoid  multiplicity  of  suits.  In  order  to  prevent  a  tort,  or  a  repetition  of 
one  already  committed,  an  injunction  may  therefore  be  granted.  This  may 
be  done  especially  in  case  of  nuisance,  but  also  for  trespass,  fraud,  violation 
of  water  rights,  violation  of  right  of  support,  and  some  other  forms  of  tort. 

Enjoining  Actions  at  Law.  The  remedy  of  injunction  is  so  far  reaching 
in  its  character  that  actions  allowable  at  Common  Law  are  sometimes 
enjoined,  when  such  actions  would  result  in  injustice  of  a  sort  which  a  court 
of  Equity  can  prevent.  This  is  accomplished  by  enjoining  litigants  from 
pursuing  such  Common  Law  actions,  but  a  court  of  Equity  is  slow  to 
grant  this  remedy. 

Engineers'  Relations  to  Injunction.  Engineers  are  peculiarly  liable  to 
attempt  some  action  to  which  the  law  takes  exception,  and  to  be  enjoined 
from  such  action.  It  may  be  the  occupation  of  lands,  public  or  private, 
for  a  railroad ;  it  may  be  the  infringement  of  some  rights  in  connection 
with  a  water  supply  or  a  sewerage  scheme ;  it  may  occur  in  some  way  with 
mills,  or  with  mining  plants.  When  an  injunction  has  been  issued,  it 
must  be  obeyed ;  a  failure  to  properly  obey  it  constitutes  contempt  of  court. 
The  superintendent  of  a  railroad  in  Massachusetts  spent  a  year  in  prison 
for  such  a  failure  to  obey  the  order  of  a  court. 


DISCOVERY 

Definition.  In  Equity  a  right  exists  to  compel  a  defendant  to  "  dis- 
cover "  and  disclose  under  oath  the  facts  within  his  knowledge  which  are 
essential  to  the  plaintiff's  case,  while  under  the  Common  Law  the  plaintiff 
must  present  evidence  to  make  his  case.  He  may,  of  course,  put  the 
defendant  on  the  stand  to  give  the  evidence  needed,  but  at  much  dis- 
advantage. 

Compelling  Evidence.  While  in  Equity  the  defendant  cannot  be  forced 
to  give  "  evidence  tending  to  criminate  himself,"  he  may  be  compelled  to 
uncover  fraud  on  his  part,  and  his  lack  of  memory  may  not  be  excusable 
in  a  written  answer  where  it  might  be  in  an  oral  examination  in  court. 
More  time  becomes  available,  also,  for  finding  errors  in  the  answer,  or  facts 
contradicting  it. 


EQUITY  5-15 

The  defendant  cannot  be  forced  to  disclose  matters  peculiarly  of  defence, 
and  is  furthermore  reasonably  exempt  from  answering  questions  which 
would  extract  information  as  to  private  accounts,  or  confidential  correspond- 
ence, or  privileged  information. 

Effect  of  Answer  Under  Oath.  Where  an  answer  under  oath  is  thus 
required  of  a  defendant,  the  plaintiff  suffers  the  disadvantage,  already  men- 
tioned, that  the  answer  is  accepted  as  true  unless  overcome  by  the  testi- 
mony of  two  witnesses,  or  of  one  with  corroborating  circumstances.  The 
plaintiff  sometimes  may  be  able  to  make  his  case  good  by  the  evidence  of 
one  good  witness  and  so  prefer  in  his  bill  not  to  make  interrogatories  which 
the  defendant  can  answer  under  oath. 


ACCOUNT 

Jurisdiction.  Equity  assumes  jurisdiction  in  many  cases  to  settle  an 
account  between  debtor  and  creditor.  It  will  not  entertain  a  bill  where  an 
account  has  been  adjusted,  or  in  simple  accounts  such  as  between  a  banker 
and  his  customer.  It  is  only  when  an  account  is  complicated,  or  in  some 
other  way  the  remedy  at  Common  Law  gives  inadequate  relief,  that  a 
court  of  Equity  is  properly  sought.  In  some  cases  the  opportunity  for 
"  discovery  "  constitutes  an  element  as  to  a  remedy  in  Equity. 

Examples.  The  assistance  of  a  court  of  Equity  may  thus  be  necessary 
to  secure  an  accounting  between  partners  as  well  as  in  other  cases  where 
there  are  several  issues  involved,  where  the  accounts  are  complicated  and 
intricate,  and  where  no  jury  could  be  expected  to  ferret  the  matter  out, 
but  where  a  "  master  "  appointed  by  the  court  could  do  so,  laboriously 
perhaps.  The  defendant  in  such  cases  may  be  required  to  state  the  account, 
when  in  Law  the  plaintiff  would  be  required  to  prove  his  own  case  in  full. 
Whether  the  court  of  Equity  will  take  jurisdiction  in  cases  of  accounting 
is  within  its  discretion. 

Closing  up  Partnerships.  In  the  case  of  winding  up  of  partnerships, 
requiring  the  action  of  judicial  tribunals,  a  court  of  Equity  frequently 
must  assume  jurisdiction,  provide  for  an  accounting,  dissolution  of  partner- 
ship, calling  in  of  assets,  sale  of  partnership  property,  and  an  equitable 
distribution  of  proceeds.  A  court  of  Law  evidently  is  inadequate  for  the 
purpose.  Sometimes  a  receiver  is  appointed  to  conduct  the  affairs  with 
due  regard  to  all  interests  involved.  Sometimes,  on  the  death  of  a  partner, 
the  other  partners  are  constituted  trustees  of  the  interests  of  the  deceased. 

Principal  and  Agent.  Sometimes  in  the  relations  between  principal 
and  agent,  lack  of  care  in  the  separation  of  the  personal  affairs  of  the  agent 
from  those  of  his  principal  may  render  an  action  in  Equity  necessary. 


5-16  EQUITY 

INTERPLEADER 

Definition.  When  a  man  holds  money  or  other  property  which  it  is  his 
duty  to  pay  over,  and  he  is  unable  to  determine  which  of  two  or  more 
parties  is  entitled  to  it,  he  may  ask  a  court  of  Equity  to  require  the  parties 
interested  to  "  interplead  "  and  allow  the  court  to  determine  what  disposi- 
tion shall  be  made  of  the  property. 

PARTITION  OF  LANDS 

Partition  of  Lands.  Partition  of  lands  is  a  subject  also  within  the  juris- 
diction of  a  court  of  Equity,  although  there  is  a  remedy  at  Common  Law 
which,  however,  is  lacking  in  efficiency.  Statute  Law  exists  in  many  States 
to  control  this  matter.  The  fact  that  many  interests  in  land  may  exist, 
through  mortgage,  lease,  or  otherwise,  makes  this  a  proper  subject  for 
Equity  jurisdiction.  The  partition  may  sometimes  be  reached  by  an 
exchange  of  deeds ;  in  some  cases  a  sale  of  the  property  and  a  division  of 
the  proceeds  is  decreed  as  the  most  satisfactory  solution. 

Enough  has  been  written  in  this  chapter  to  give  some  idea  of  what 
Equity  means,  what  its  jurisdiction  covers,  what  rights  exist,  and  what 
remedies  are  possible  under  it.  Actions  in  Equity,  however,  peculiarly 
demand  the  services  of  lawyers  skilled  in  this  branch  of  law. 


CHAPTER  VI 
REAL  PROPERTY 

Definition.  Property  is  divided  into  two  classes,  real  property  and 
personal  property.  The  distinction  between  the  two  is  dependent  funda- 
mentally on  the  fact  that  land  is  immovable  so  that  the  thing  itself,  the 
"  real  "  thing,  can  be  recovered ;  while  goods  and  chattels  are  movable 
and  recovery  is  often  impossible,  so  that  an  action  against  the  person 
involved  is,  with  certain  qualifications,  the  accepted  remedy.  Hence 
"  real  "  and  "  personal  "  property. 

Real  property  includes  lands,  the  waters  above,  the  minerals  beneath, 
the  houses  standing  and  the  trees  growing  thereon,  but  commonly  not  the 
growing  crops. 

Historical.  In  England  after  the  Norman  Conquest,  the  law  of  feudal 
tenure  established  the  principle  that  the  supreme  ownership  of  land  lay 
in  the  Crown.  No  subject  could  hold  absolute  ownership  of  land;  he 
could  hold  only  an  interest  which  came  through  a  grant  from  the  King. 

Estates.  The  interest  or  "  estate  "  granted  was  at  first  for  a  limited 
period ;  later  for  life ;  and  eventually  it  became  possible  to  sell  or  bequeath 
one's  estate  completely,  so  that  to  the  estate  granted  were  secured  practi- 
cally all  the  elements  of  ownership.  This  fiction  of  ownership  exists  in 
this  country  to  the  extent  that  if  a  man  dies  without  making  a  will  and 
without  heirs,  the  land  reverts  to  the  owner,  the  sovereign,  which  in  this 
country  is  the  State  in  which  the  land  lies. 

Estate  for  Years ;  for  Life.  The  "  estate  for  years  "  we  know  under  the 
name  "  lease  " ;  the  "  estate  for  life,"  not  common  in  the  United  States, 
is  granted  during  the  life  of  some  person  specified,  and  on  his  death  the 
land  reverts  to  the  grantor  or  the  heirs  or  assigns  of  the  grantor. 

Fee  Simple.  The  "  estate  in  fee  simple  "  is  a  conveyance  to  the  grantee 
"  and  his  heirs  forever  "  and  conveys  a  complete  title,  which  in  the  United 
States  has  so  many  of  the  characteristics  of  absolute  ownership  that  the 
necessity  for  the  distinction  now  seldom  needs  to  be  considered  and  in  some 
States  has  been  done  away  with  by  statute.  The  fact  that  land  or  real 
estate  cannot  be  removed  makes  possible  legal  proceedings  peculiar  to 
real  property ;  the  real  estate  remains  within  the  jurisdiction  of  the  appro- 

6-1 


6—2  REAL  PROPERTY 

priate  local  courts,  can  readily  be  reached  through  legal  processes  and,  if 
necessary  and  proper,  can  be  returned  to  its  rightful  owner  if  for  any  reason 
it  has  illegally  been  taken  from  him. 

Delivery.  With  personal  property,  change  of  possession  or  delivery 
is  often  the  critical  feature  that  determines  ownership  or  title  to  the  prop- 
erty; with  real  property,  actual  delivery  is  not  possible,  although  de- 
livery of  something  forming  a  part  of  the  landed  estate,  perhaps  a  twig  or 
shrub,  has  in  times  past  been  performed  as  the  equivalent  of  the  delivery 
of  the  land.  Later  the  delivery  of  the  deed,  the  written  instrument  solem- 
nizing the  transaction,  serves  this  function  of  delivery  of  the  property. 

DEEDS 

Deed.  The  deed  is  thus  evidence  in  writing  of  an  executed  contract 
for  the  sale  of  land.  The  Statute  of  Frauds  requires  that  any  contract  for 
the  sale  of  lands,  or  an  interest  in  them,  shall  be  evidenced  in  writing,  and 
the  written  deed  meets  that  requirement.  The  deed,  however,  is  a  very 
formal  document  and  needs  not  only  to  be  in  writing,  but  also  to  be  written 
by  some  one  familiar  with  its  requirements ;  it  is  quite  a  different  case  from 
that  of  simple  contracts. 

Warranty  and  Quitclaim  Deeds.  Deeds  are  of  two  principal  forms  or 
classes,  "  warranty  "  deeds  and  "  quitclaim  "  deeds.  In  the  warranty 
deed,  the  grantor  engages  that  he  is  the  lawful  owner  of  the  real  estate  and 
guarantees  to  make  the  grantee  whole  if  it  be  found  that  his  title  to  the 
estate  is  not  good.  The  quitclaim  deed  passes  on  to  the  grantee  whatever 
title  the  grantor  has.  There  is  commonly  added  to  this  a  covenant  that 
the  granted  premises  are  free  from  all  incumbrances  made  or  suffered  by 
him.  The  formal  words  used  in  these  two  kinds  of  deed  are  in  general 
quite  different. 

Form  of  Warranty  Deed.  The  general  form  of  the  short  warranty  deed 
formerly  used  in  Massachusetts  is  as  follows : 

Know  all  men  by  these  presents : 

That  I,  A.  B.  of ,  in .County,  State  of ,  in  considera- 
tion of dollars,  to  me  paid  by  C.  D.  of ,  in County, 

State  of ,  the  receipt  of  which  I  hereby  acknowledge,  do  by  these  presents 

give,  grant,  bargain,  sell,  and  convey  unto  said  C.D.,  his  heirs  and  assigns,  all  that 

certain  parcel  of  land  situated  in ,  in County,  and  State  of 

,  bounded  and  described  as  follows :  (here  follows  the  description) ,  together 

with  all  the  privileges  and  appurtenances  to  the  said  land  in  anywise  appertaining 
and  belonging. 

To  have  and  to  hold  the  above  granted  premises  with  all  the  privileges  and 
appurtenances  thereto  belonging,  to  the  said  C.D.  and  his  heirs  and  assigns,  to  his 
and  their  use  and  behoof  forever. 


REAL  PROPERTY  6—3 

And  I  hereby  for  myself  and  my  heirs,  executors,  and  administrators,  covenant 
with  the  grantee  and  his  heirs  and  assigns  that  I  am  lawfully  seized  in  fee  simple 
of  the  granted  premises ;  that  they  are  free  from  all  incumbrances ;  that  I  have 
good  right  to  sell  and  convey  the  same  as  aforesaid ;  and  that  I  will  and  my  heirs, 
executors,  and  administrators,  shall  warrant  and  defend  the  same  to  the  grantee 
and  his  heirs  and  assigns  forever  against  the  lawful  claims  and  demands  of  all 
persons. 

In  witness  whereof,  I,  the  said  A.B.  have  hereunto  set  my  hand  and  seal  this 

....  day  of in  the  year  one  thousand  nine  hundred  and 

Signed  and  sealed  hi 
presence  of 

(Signature)  (SEAL) 

Phraseology.  In  looking  at  this  deed  the  first  thing  of  importance 
is  the  phraseology,  "do  by  these  presents  give,  grant,  bargain,  sell  and 
convey  unto  the  said  party  of  the  second  part,  his  heirs  and  assigns." 
These  words  of  conveyance  seem  to  be  important  and  it  is  advisable  to  use 
the  exact  phraseology  that  is  common  in  the  State  in  which  the  land  is 
sold,  because  in  other  States  slightly  different  words  are  often  used.  For 
instance,  in  another  State  the  words  used  are  "  grant,  bargain,  sell  and 
confirm." 

Another  Form  of  Warranty  Deed.  The  general  short  form  of  the 
warranty  deed  once  used  in  New  Jersey  is  somewhat  different : 

This  conveyance  made  this dayof . . .  .A.D.  19. .,  by  A.B.,  of 

County,  and  State  of ,  of  the  first  part  to  C.D.,  of County,  and  State 

of ,  of  the  second  part,  witnesseth : 

That  said  party  of  first  part,  for  the  consideration  of dollars,  the 

receipt  of  which  is  hereby  acknowledged,  has  and  by  these  presents  does  grant, 
bargain,  sell  and  convey  unto  said  party  of  the  second  part,  his  heirs  and  assigns, 

all  that  tract  and  parcel  of  land,  situated  in ,  in County,  and 

State   of ,    to  wit:    (here  follows  description),  together  with  the  rights, 

members,  privileges  and  appurtenances,  and  the  reversions  and  remainders,  rents, 
issues  and  profits  thereof. 

To  have  and  to  hold  the  same  unto  said  party  of  the  second  part,  his  heirs  and 
assigns,  to  his  and  their  only  use,  benefit,  and  behoof,  forever. 

And  the  said  party  of  the  first  part  does,  for  himself,  his  heirs,  executors  and 
administrators,  covenant  with  said  party  of  the  second  part,  his  heirs  and  assigns, 
that  at  the  sealing  and  delivery  hereof  he  is  the  owner  in  fee  simple  of  the  said 
premises  hereby  granted  or  intended  so  to  be ;  that  the  same  are  free  and  clear  of 
all  charges  or  incumbrances  whatsoever,  and  that  he  and  they  the  said  premises 
unto  said  party  of  the  second  part,  his  heirs  and  assigns,  against  all  persons  lawfully 
claiming  or  to  claim  the  same,  shall  and  will  warrant  and  forever  defend. 

In  witness  whereof,  said  party  of  the  first  part  has  hereunto  set  his  hand  and 
seal  the  day  and  year  first  above  written : 
Executed  in  presence  of 

(Signature)  (SEAL) 


6-4  REAL  PROPERTY 

Another  Form  of  Warranty  Clause.    The  following  form  of  warranty 
clause  is  used  in  some  States : 


And  I,  the  said  A.B.  for  myself,  my  heirs,  executors  and  administrators,  do 
covenant  with  said  C.D.,  his  heirs  and  assigns,  that  I  am  lawfully  seized  in  fee  of 
the  aforegranted  premises;  that  they  are  free  from  all  incumbrances ;  that  I 
have  good  right  to  sell  and  convey  the  same  to  said  C.D.  as  aforesaid ;  that  I 
will,  my  heirs,  executors  and  administrators  shall,  warrant  and  defend  the  same 
to  said  C.D.,  his  heirs  and  assigns,  forever,  against  the  lawful  demands  of  all 
persons. 

In  witness  whereof,  I,  the  said  A.B.,  have  hereunto  set  my  hand  and  seal, 
this day  of 19. . 

(Signature)  (SEAL) 

Form  of  Quitclaim  Deed.  The  quitclaim  deed  uses  different  words 
and  the  following  sometimes  used  in  Kansas  is  an  illustration : 

This  conveyance  made  this day A.D.  19. .,  by  A.B.  of 

County  hi  the  State  of ,  of  the  first  part,  to  C.D.,  of County  in  the  State 

of ,  of  the  second  part,  witnesseth : 

That  the  said  party  of  the  first  part,  hi  consideration  of  the  sum  of 

dollars,  the  receipt  of  which  is  hereby  acknowledged,  does  by  these  presents 
remise,  release,  and  forever  quitclaim  unto  the  said  party  of  the  second  part,  his 

heirs  and  assigns,  all  the  following  real  estate,  situated  in  the  County  of 

and  State  of ,  to  wit :  (here  follows  description). 

To  have  and  to  hold  the  same  together  with  all  and  singular  the  tenements, 
hereditaments,  and  appurtenances  thereunto  belonging,  or  in  anywise  appertaining, 
unto  the  said  party  of  the  second  part,  his  heirs  and  assigns  forever.  And  the  said 
A.B.  for  himself,  his  heirs,  executors,  or  administrators,  does  hereby  covenant,  promise, 
and  agree,  to  and  with  said  party  of  the  second  part,  his  heirs  and  assigns,  that  he 
has  not  made,  done,  committed,  executed,  or  suffered  any  act  or  acts,  thing 
or  things,  whatsoever,  whereby  or  by  means  whereof  the  within  granted 
and  described  premises,  or  any  part  thereof,  now  are  incumbered  in  any  manner 
whatsoever. 

In  witness  whereof,  the  said  party  of  the  first  part  has  hereunto  set  his  hand, 
the  day  and  year  first  above  written 

(Signature) 

Special  Warranty.  In  some  deeds  having  the  general  appearance  of  a 
warranty  deed,  a  "  special  warranty "  form  is  used,  substantially  as 
follows : 

that  he  has  not  done,  or  suffered  to  be  done,  anything  whereby   said 

premises  hereby  granted  or  intended  to  be,  are  or  may  be  in  any  manner  incumbered 
or  charged ;  and  that  he  and  they  the  said  premises  unto  said  party  of  the  second 


REAL   PROPERTY  6—5 

part,  his  heirs  and  assigns,  against  all  persons  lawfully  claiming  or  to  claim,  by, 
through,  or  under  said  parties  of  the  first  part  shall  and  will  warrant  and  forever 
defend. 

Scope  of  Special  Warranty.  It  should  be  noted  and  clearly  under- 
stood that  this  special  warranty  does  not  insure  or  guarantee  title  against 
any  one  who  has  a  good  title,  or  who  has  an  adverse  claim  against  the 
grantor,  but  only  warrants  or  guarantees  that  the  grantor  has  not  conveyed 
the  property  to  others  or  allowed  claims  to  accrue  against  the  property. 
With  the  "  special  warranty  "  it  appears  not  very  important  whether 
the  words  used  are  "  grant,  bargain,  sell,  and  convey  "  or  are  "  remise, 
release,  and  forever  quitclaim"  The  deed  is  little  better  than  a  quitclaim 
deed. 

Some  of  the  old,  long  form  deeds  contain  the  words : 

together  with  all  and  singular  the  tenements,  hereditaments  and  appurte- 
nances thereto  belonging,  or  in  anywise  appertaining,  and  the  reversion 
and  reversions,  remainder  and  remainders,  and  the  rents,  issues  and  profits 
thereof. 

The  terms  were  used  when  the  idea  was  predominant  that  there  was  no 
ownership  of  land  (except  in  the  King)  and  when  estates  other  than  in  fee 
simple  were  not  unusual  and  when  some  interest  in  the  land  was  either  left 
over  or  reverted.  They  hardly  need  attention  here. 

Kent's  Short  Form  of  Deed.     In  Kent's  Commentary  it  is  stated : 

"  I  apprehend  that  a  deed  would  be  perfectly  competent  in  any  part  of  the  United 
States  to  convey  the  fee,  if  it  has  to  be  to  the  following  effect:  I,  A.  B.,  hi  considera- 
tion of  one  dollar  to  me  paid  by  C.D.,  do  bargain  and  sell  (or  in  New  York,  grant) 
to  C.D.  and  his  heirs  (in  New  York,  Virginia,  etc.,  the  words  "and  his  heirs"  may 
be  omitted)  the  lot  of  land  (describe  it),  witness  my  hand  and  seal,"  etc. 

Nevertheless  the  practice  down  from  Chancellor  Kent's  time  has  been 
in  conformity  with  the  opinion  of  Lord  Coke, 

"that  it  is  not  advisable  to  depart  from  the  formal  and  orderly  parts  of  a  deed, 
which  have  been  well  considered  and  settled." 

Standard  Forms.  It  is  undoubtedly  wise  to  use  in  each  State  the 
standard  forms  in  use  in  that  State,  and  printed  blank  forms  are  usually 
available.  Deeds  for  real  estate  are  not  documents  in  which  it  is  de- 
sirable to  incorporate  any  original  ideas.  In  many  States,  by  statute, 
simple  short  forms  have  been  definitely  authorized. 

Statute  Form  of  Warranty  Deed  in  Massachusetts. 

I,   A.  B.,    of , County,    Massachusetts,    being  unmarried, 

for  consideration  paid,  grant  to  C.D.  of with  Warranty 


6-6  REAL  PROPERTY 

Covenants,  the  land  in 

and  I,  E.B.,  wife  of  said  grantor,  release  to  said  grantee  all  rights  of  dower  and 
homestead  and  other  interests  therein. 

Witness  my  hand  and  seal  this day  of 1917. 

Provision  for  this  is  made  by  Statute  in  Massachusetts  as  follows : 

EXTRACT  FROM  CHAPTER  502,  SECTION  2,  ACTS  OF  1912 

Every  deed  in  substance  in  the  above  form,  when  duly  executed,  shall  have  the 
force  and  effect  of  a  deed  in  fee-simple  to  the  grantee,  his  heirs  and  assigns,  to  his 
and  their  own  use,  with  covenants  on  the  part  of  the  grantor  for  himself,  his  heirs, 
executors,  administrators  and  successors,  with  the  grantee,  his  heirs,  successors 
and  assigns  that,  at  the  time  of  the  delivery  of  such  deed,  (1)  he  was  lawfully  seized 
in  fee-simple  of  the  granted  premises,  (2)  that  the  granted  premises  were  free  from 
all  encumbrances,  (3)  that  he  had  good  right  to  sell  and  convey  the  same  to  the 
grantee  and  his  heirs  and  assigns,  and  (4)  that  he  will  and  his  heirs,  executors  and 
administrators  shall  warrant  and  defend  the  same  to  the  grantee  and  his  heirs  and 
assigns  against  the  lawful  claims  and  demands  of  all  persons. 

Heirs  and  Assigns.  It  should  especially  be  noted  that  in  most  States, 
unless  the  words  "  and  his  heirs  "  are  used,  the  estate  conveyed  is  only  an 
"  estate  for  life  "  and  not  an  estate  in  fee  simple.  In  some  States  including 
New  York,  that  distinction  has  been  abolished  by  statute.  There  have 
been  decisions  that  "  his  heir  "  is  not  equivalent  to  "  his  heirs  "  and  the 
phrase  "  or  his  heirs  "  has  been  hald  insufficient  to  convey  an  estate  in  fee 
simple.  With  corporations,  trustees,  or  others  who  cannot  have  heirs, 
"  assigns  "  would  appear  necessary.  It  should  be  further  noted  that 
in  many  States,  the  consideration  usually  expressed  is  one  dollar.  In 
many,  perhaps  most  States,  the  warranty  will  hold  for  the  value  of  the 
land  at  the  time  the  value  is  proved ;  in  some  States,  however,  the  recovery 
under  the  warranty  will  be  only  for  the  value  expressed  as  the  considera- 
tion in  the  deed,  perhaps  with  interest  added,  so  that  one  dollar  will  be 
inadequate.  An  engineer  who  draws  a  deed  should  know  what  is  the  law  in 
this  respect  in  the  State  where  the  land  lies. 

Warranty  Perfects  Title.  An  additional  distinction  is  that  in  the  case 
of  a  warranty  deed,  if  the  grantor  did  not  have  a  perfect  title  when  the 
deed  was  signed  and  delivered,  yet  if  at  any  time  later  he  perfects  his  title, 
the  warranty  deed  acts  to  perfect  the  title  of  the  grantee  as  well.  With  a 
quitclaim  deed,  the  grantee  receives  only  such  title  as  the  grantor  had  at 
the  time  the  deed  was  signed,  and  any  later  acquirement  of  title  by  the 
grantor  does  not  cure  such  a  defect. 

Financial  Ability  of  Grantor.  On  the  other  hand,  it  should  be  further 
stated  that  if  the  title  be  in  fact  defective,  a  warranty  deed  is  a  protection 
only  so  far  as  the  grantor  is  financially  able,  or  so  far  as  his  heirs  are  finan- 


REAL  PROPERTY  6-7 

cially  responsible,  that  is  to  the  extent  of  whatever  they  received  from  the 
grantor.  If  the  grantor  fails,  or  if  he  gives  away  his  money  (to  his  heirs 
perhaps  before  his  death  so  that  they  inherit  nothing  from  him),  the  war- 
ranty gives  no  protection  if  someone  else  establishes  a  good  title  to  the 
land. 

What  Quitclaim  Deed  Conveys.  A  quitclaim  deed  on  the  contrary 
conveys  all  the  title  the  grantor  had  at  the  time,  and  if  his  title  was  then 
good,  the  quitclaim  deed  conveys  a  full  and  complete  title. 

It  is  wise  to  keep  clearly  in  mind  these  distinctions  between  the  two  forms 
of  deed. 

Essentials  of  Deed.  The  deed  being  a  formal  document,  there  are 
five  essential  requirements.  It  must  be  (1)  signed,  (2)  sealed,  (3)  acknowl- 
edged, (4)  delivered,  and  (5)  recorded. 

1.  Signed.     There  appears  to  be  no  legal  requirement  that  the  signa- 
ture should  be  in  ink,  but  with  a  formal  document  a  signature  in  pencil  is 
undesirable  from  good  business  principles,  on  account  of  its  lack  of  perma- 
nence and  the  possibility  of  erasure  and  change.     It  should  be  understood 
also  that  any  interlineation  or  erasure  in  the  body  of  the  deed  or  of  any 
important  written  document  raises  suspicion.     The  party  offering  it  as 
evidence  has  the  burden  of  proof  to  show  that  it  is  genuine  and  that  the 
alterations  were  properly  made.     It  is  further  necessary  that  the  deed  should 
be  written  (or  printed)  on  paper  or  parchment ;  a  shingle,  or  a  piece  of  tin 
or  aluminum,  or  a  skin  not  made  into  parchment,  will  not  suffice. 

Witnesses.  In  some  States,  but  not  all,  witnesses  to  the  signature 
are  necessary.  It  is  not  necessary  in  any  case  that  the  signature  be  made 
in  the  presence  of  witnesses  as  in  the  case  of  wills ;  a  later  statement  to 
the  witness  by  the  signer  is  sufficient.  If  the  grantor  cannot  sign  his 
name,  it  is  customary  for  him  to  make  his  cross,  or  "  mark/'  with  his  name 
written  by  someone  else  against  this ;  ordinarily  there  should  be  two  com- 
petent witnesses  to  his  mark. 

Wife's  Signature.  The  signature  of  the  wife  should,  in  nearly  every 
State,  be  taken  either  to  the  deed  itself  or  by  a  separate  document  releasing 
her  right  of  dower. 

2.  Sealed.     The  deed  should  also  be  sealed;    and  the  seal  is  some 
adhesive  article,  formerly  a  wafer,  more  commonly  a  round  piece  of  paper 
with  mucilage  or  something  adhesive  to  make  it  stick.     Where  no  regular 
seal  is  at  hand,  anything  which  can  be  stuck  to  the  paper  will  serve  the 
purpose,  and  a  postage  stamp  or  half  a  postage  stamp  will  readily  serve 
the  purpose.     In  some  States  it  is  sufficient  to  make  a  "  scroll "   or 
"  scrawl  "  with  a  pen  with  the  word  "  seal  "  written  in  the  middle,  or 
have  a  similar  device  printed  in  the  deed,  but  in  several  States  this  is  held 
not  to  be  legal,  and  one  should  not  adopt  this  expedient  unless  he  is  sure 


6_8  REAL  PROPERTY 

that  the  law  authorizes  it.    There  are  some  States  in  which  a  seal  is  not 
required. 

3.  Acknowledged.     The  deed  should   also  be    acknowledged  before 
some  authorized  officer.     Most  deeds  are  acknowledged  before  a  notary 
public  who  is  authorized  by  the  State  to  act  in  that  capacity  and  who  uses 
(as  authorized  by  statute)  a  seal  which  stamps  an  impression  into  the 
paper;    he  often  attaches  (sticks)  a  piece  of  paper  before  stamping  the 
impression.     An  acknowledgment  before  a  justice  of  the  peace  is  almost 
everywhere  equally  satisfactory,  although  he  does  not  have  a  seal  as  the 
notary  does.     The  notary  or  justice  of  the  peace  ought  to  know  the  form 
in  which  the  acknowledgment  should  be  made  and  it  is  not  important  that 
the  engineer  should  be  specifically  posted  upon  that  point.     Where  a 
deed  is  acknowledged  outside  the  State  in  which  the  land  lies,  it  is  advisable 
that  the  statutes  should  be  consulted  to  see  in  what  form  the  acknowledg- 
ment should  be;    the  specific  statutory  requirements  must  be  strictly 
observed.     In  some  States,  as  in  Massachusetts,  it  is  sufficient  and  cus- 
tomary that  only  one  of  the  parties  to  the  deed  shall  make  acknowledg- 
ment of  his  signature ;  it  must  be  a  party  having  an  interest  in  the  land. 
In  most  other  States  all  the  signatures  should  be  acknowledged,  and  in 
some  States  the  signatures  of  witnesses  must  also  be  acknowledged.     The 
form  of  acknowledgment  to  the  wife's  signature  is  commonly  fixed  by 
statute  and  should  be  rigorously  followed.     Other  words,  "  just  as  good," 
will  not  serve  the  purpose.     The  acknowledgment  is  necessary  before  a 
deed  can  be  recorded;   it  also  has  value  from  the  standpoint  of  evidence 
in  the  direction  of  proving  the  signature  to  the  deed. 

4.  Delivered.     A  deed  for  land,  signed,    sealed,    acknowledged,  but 
locked  in  the  grantor's  desk  and  found  there  perhaps  after  his  death,  does 
not  convey  the  land.     Delivery  is  necessary ;  there  must  be  some  act  indicat- 
ing delivery.     It  has  been  stated  that  originally  some  sort  of  delivery  of 
the  land  was  made;   that  is,  some  small  shrub  or  weed  was  delivered  to 
the  grantee  as  a  symbol  of  delivery.     In  the  case  of  real  property,  delivery 
of  the  deed  is  effectively  the  delivery  of  the  property.     Sometimes  a  deed 
is  delivered  or  put  into  the  hands  of  a  third  party,  to  be  held  "  in  escrow  " 
until  final  payment  is  made  or  some  specific  act  performed,  when  it  is 
to  be  delivered  to  the  grantee.     The  delivery  of  the  deed  to  the  grantee  in 
this  case  may  be  made  after  the  death  of  the  grantor;   in  passing  the 
deed  to  the  third  party,  an  act  of  delivery  by  the  grantor  has  occurred. 

5.  Recorded.     A  deed  is  recorded  at  the  office  of  the   Recorder  of 
Deeds,  or  the  County  Clerk,  or  whatever  officer  is  specified  by  law  for  such 
duty.     When  properly  executed  and  acknowledged  and  so  recorded,  it 
becomes  a  notice  to  all  the  world  of  the  transaction  shown  in  the  record, 
and  any  one  engaging  in  a  transaction  as  to  that  property  does  so  with 


REAL   PROPERTY  6—9 

knowledge  of  the  transaction.  It  will  not  be  recorded  unless  acknowledged. 
If  a  grantor  either  accidentally  or  wrongfully  conveys  the  same  real  estate 
to  two  different  persons,  the  one  who  first  records  his  deed  will  take  title 
to  the  property  in  the  absence  of  fraud  on  his  part,  no  matter  who  first 
received  his  deed.  In  some  States,  however,  there  is  fixed  by  statute  a 
limited  time  within  which  the  deed  of  earlier  date  prevails.  The  recorder 
generally  notes  on  the  deed,  the  year,  month,  day,  and  minute,  that  the 
deed  was  received ;  this  is  done  at  the  time  the  deed  is  handed  to  the  re- 
corder. In  many  cases  where  convenient,  the  deed  is  signed,  the  money 
paid,  the  deed  delivered  and  at  once  recorded,  all  these  transactions 
occurring  in  the  recorder's  office ;  the  money  is  not  paid  until  a  final  inquiry 
is  made  at  the  desk  whether  any  deed  or  other  paper  affecting  that  property 
has  recently  been  recorded.  This  represents  good  practice.  In  some 
States  a  deed  recorded  need  not  be  otherwise  proved,  but  this  is  not  the 
case  in  most  States ;  deeds  more  than  thirty  years  old  are  ancient  docu- 
ments and  do  not  require  direct  proof. 

TITLE 

Search  of  Title.  Before  a  conveyance  of  real  estate  is  accepted,  that 
is  commonly  before  the  deed  is  made,  and  more  certainly  before  the  money 
is  paid  over,  a  careful  search  of  the  title  should  be  made  to  see  that  a  con- 
tinuous line  of  title  exists  from  some  very  early  date  until  the  time  of  the 
conveyance.  This  proceeding  consists  of  two  important  parts.  First,  to 
see  that  the  chain  of  title  is  complete ;  for  instance,  with  lands  granted  by 
the  United  States  Government,  that  the  patent  from  the  United  States 
to  A  and  subsequent  deeds  from  A  to  B,  B  to  C,  C  to  D,  etc.,  form  an 
unbroken  chain  from  the  beginning  to  the  party  about  to  convey  the 
land.  There  must  be  no  deeds  of  this  land  from  any  of  these  to  parties 
outside  the  chain.  In  many  of  the  older  settlements,  the  chain  is  carried 
back,  not  to  the  beginning,  which  may  not  be  possible,  but  only  to  a  point 
which  seems  safe.  Second,  to  see  that  the  various  conveyances  are  in 
proper  form  and  sufficient,  so  that  the  chain  of  titles  does  in  fact,  as  well 
as  in  appearance,  convey  a  good  title. 

Title  Abstract  Companies.  In  many  of  the  Western  States  the  title 
can  be  traced  back  to  the  grant  from  the  Government  of  the  United  States, 
and  there  are  "  title  abstract  companies  "  which  have  compiled  records 
which  show  every  transaction  touching  every  particular  piece  of  land  in 
a  county.  In  a  fashion,  it  is  a  special  form  of  index,  where  for  each  piece 
of  property  a  list  is  made  of  all  the  deeds  which  have  passed  touching  that 
particular  piece  of  land. 

Title  Insurance  Companies  Conveyancers.  In  Eastern  cities  there  are 
"  title  insurance  companies,"  and  firms  of  lawyers  who  announce  them- 


6—10  REAL  PROPERTY 

selves  as  "  conveyancers,"  and  who  make  a  special  business  of  examining 
titles  and  reporting  on  them.  In  these  older  parts  of  the  country,  it  is 
not  always  possible  to  go  back  to  the  original  grant,  but  conveyancers 
go  back  far  enough  to  satisfy  themselves  that  there  is  no  difficulty  beyond 
the  point  from  which  they  start.  The  conveyancer  in  the  East  not  only 
looks  up  the  chain  of  title  from  party  to  party,  but  he  also  passes  upon 
the  question  whether  each  deed  is  satisfactory  and  does  in  fact  properly 
convey  what  it  purports  to  convey. 

Scope  of  Abstract  of  Title.  The  abstract  of  title  obtained  in  one  of  the 
Western  States  is  simply  a  list  of  deeds  touching  that  property,  and  the 
services  of  a  competent  lawyer  are  needed  to  make  sure  that  those  deeds 
are  properly  drawn,  and  do  in  fact  constitute  a  complete  chain  of  convey- 
ances ;  that  the  deeds  are  adequate,  and  do  properly  convey  title  of  the  land. 

Mortgages,  Taxes,  Judgments.  Besides  deeds  proper,  it  is  necessary 
to  look  for  mortgages,  taxes,  assessments  for  sewers,  betterments,  wills, 
contracts  to  convey,  judgments  of  the  court,  attachments  in  the  case  of 
suits  started,  and  whatever  else  may  tend  to  constitute  an  encumbrance,  or 
impair  the  title  of  the  estate.  All  such  work  should  be  done,  however, 
by  a  competent  lawyer,  familiar  with  this  class  of  work,  unless  an  engineer 
has  acquired  an  adequate  experience  under  a  lawyer,  so  that  he  is  capable 
of  looking  up  such  matters  himself. 

Land  Courts.  In  several  of  the  States,  Land  Courts  have  been  estab- 
lished for  perfecting  or  "  quieting  "  title,  following  the  so-called  "  Torrens  " 
system  of  Australia ;  the  name  used  may  vary  in  different  States.  Provi- 
sion for  this  is  made  by  statute  whose  express  directions  must  be  strictly 
followed.  Application  is  made  to  this  Land  Court,  which  notifies  all 
parties  thought  to  have  an  interest  in  this  land  or  its  boundaries ;  an 
examiner  of  the  court  makes  a  thorough  search  of  the  title ;  a  hearing  is 
had,  and  the  title  confirmed  if  everything  seems  all  right.  The  title  is 
then  secure  to  the  party  making  the  application.  Occasionally,  but  rarely, 
some  party  having  a  valid  interest  appears  later  and  succeeds  in  proving  his 
claim.  This  claimant  is  nevertheless  denied  possession  or  title  to  the  land, 
but  is  paid  damages  by  the  State  from  funds  derived  from  fees  paid  by  the 
reputed  owners  of  land  as  part  of  the  requirements  for  securing  the  confirma- 
tion of  title  by  the  Land  Court.  For  a  single  conveyance  of  land,  the  pro- 
cess is  somewhat  expensive.  Later  conveyances  are  much  less  expensive. 
It  seems  probable  that  the  Land  Court  will  steadily  grow  in  favor. 

LEASE 

Lease.  What  is  sometimes  called  an  "  estate  for  years  "  is  better  known 
as  a  "  lease,"  and  in  this  is  involved  the  law  of  "  landlord  and  tenant." 
A  lease  need  not  be  for  as  much  as  a  year,  it  may  be  for  a  determinate 


REAL   PROPERTY  6-11 

number  of  days  or  months.  It  must  be  for  a  certain  term,  although  it 
may  be  possible  that  circumstances  will  effect  an  earlier  termination ;  an 
instance  is  a  lease  for  ten  years  if  the  tenant  shall  live  so  long.  The  tenant 
does  not  acquire  an  "  estate  "  in  the  land  until  he  has  made  entry  upon 
it ;  he  is,  however,  entitled  to  possession. 

Statute  of  Frauds.  It  being  an  "  estate"  when  acquired,  a  clear 
interest  in  land,  a  writing  is  necessary  under  the  Statute  of  Frauds.  If 
the  lease  is  signed  by  an  agent,  it  is  essential  in  some  States  that  his  author- 
ity to  sign  shall  be  in  writing,  but  not  in  all  States ;  it  is  important  in  any 
case  to  know  the  law  in  any  State.  Sometimes  there  is  a  question  whether 
a  writing  is  really  a  lease  or  only  an  agreement  to  lease.  The  writing  made 
by  any  engineer  should  make  this  clear. 

Rent.  The  provisions  for  payment  of  rent  should  be  clear ;  the  period, 
whether  monthly,  quarterly,  or  yearly,  should  be  specified ;  if  payment  in 
advance,  or  payment  on  demand,  is  not  specified,  the  tenant  must  pay  rent 
before  sunset  on  the  last  day  of  the  month  or  other  specified  period.  A 
failure  to  do  so  might  lead  to  forfeiture,  but  most  landlords  are  accus- 
tomed to  allow  some  days  of  grace,  and  the  lease  (a  contract)  would  hardly 
be  forfeited  unless  payment  of  rent  was  first  demanded,  or  unless  the  rent 
remained  unpaid  for  a  full  month  or  other  full  period.  Landlords  or 
their  agents  often  ask  the  tenant  to  sign  iron-clad  agreements  favorable  to 
the  landlord.  The  tenant  should  read  any  lease  before  signing  it. 

Tenant  Can  Not  Dispute  Title.  The  law  does  not  allow  a  tenant  to 
dispute  the  title  of  his  landlord  while  he  is  a  tenant.  If  a  man  has  a  good 
title  to  a  piece  of  land,  it  is  wiser  for  him  to  avoid  being  a  tenant  of  another 
who  makes  any  claim  to  it. 

Tenancy  without  Lease.  In  many  cases  a  tenant  holds  real  estate  with- 
out a  lease,  paying  rent  every  week,  or  month,  or  quarter,  or  perhaps  year. 
Under  such  circumstances,  either  landlord  or  tenant  may  terminate  the 
tenancy  upon  notice  equal  to  a  full  rent  period  and  terminating  at  the  end 
of  such  regular  rent  period.  In  some  States,  a  tenancy  for  a  year  or 
series  of  years  needs  only  a  half  year's  notice,  and  in  some  localities  there 
are  local  customs  fixing  the  amount  of  notice,  for  example,  at  two  weeks 
when  the  rent  is  payable  monthly.  Unless  otherwise  provided,  a  lease  is 
assignable. 

Buildings  and  Improvements.  In  general,  whatever  of  buildings  or 
improvements  stands  upon  the  lands  and  whatever  grows  upon  the  lands, 
belong  to  the  landlord ;  but  under  a  lease,  the  tenant  is  entitled  to  the 
crops  of  annual  planting  or  requiring  special  annual  care  if  planted  by 
the  tenant,  even  if  the  lease  be  fortuitously  terminated  before  the  full 
term ;  but  the  grass,  or  clover,  or  annual  fruits,  would  not  go  to  the  tenant 
unless  his  term  covered  the  harvest  time.  The  same  question  is  involved 


6-12  REAL  PROPERTY 

in  selling  lands  or  the  crops  on  them.  If  the  full  term  of  the  lease  expires 
before  harvest  time,  the  crops  do  not  belong  to  the  tenant ;  he  foresaw  the 
result  when  he  planted.  Nursery  trees  and  shrubs  raised  for  sale  belong 
to  the  tenant  on  the  same  basis  as  for  other  crops. 

Death  of  Tenant.  In  case  the  lease  is  terminated  by  the  tenant's 
death,  crops  ripe  and  ready  for  harvest  go  to  the  personal  representatives 
of  the  decedent ;  they  go  to  the  executor  rather  than  to  the  heirs,  and  he 
is  entitled  to  reasonable  time  to  remove  them ;  this  is  true  also  of  a  pur- 
chaser of  such  crops  sold  standing.  If  already  cut,  crops  are  entirely 
severed  from  the  real  property  and  are  personal  property.  Manure  on 
the  land  is  held  to  be  part  of  the  real  estate. 

Engineer's  Knowledge  of  Rights  of  Parties.  The  engineer  may  need 
to  purchase  or  to  pay  for  crops  or  materials  and  should  have  some  knowl- 
edge as  to  ownership.  He  may  also  for  some  reason  (or  his  contractor 
may)  encroach  upon  lands,  and  he  should  have  some  knowledge  as  to  whose 
rights  he  has  violated,  or  who  has  suffered  damages.  In  this  connection, 
it  may  be  stated  that  not  only  are  growing  crops  sold  standing,  but  trees 
are  also  sometimes  sold  standing  by  the  landlord,  and  may  thus  become  the 
personal  property  of  the  purchaser. 

Trespass.  It  has  been  stated  in  the  chapter  on  torts  that  a  trespass  is 
against  the  person  in  possession,  the  tenant  if  there  be  one.  In  the  case  of 
trespass  on  leased  land,  if  trees  belonging  to  the  landlord  are  cut  or  damaged 
by  a  person  other  than  the  tenant,  the  landlord  has  not  the  right  to  enter 
upon  the  land  to  prevent  the  damage.  He  has  a  remedy  of  another  sort, 
but  through  a  suit  where  a  lawyer  is  necessary. 

Clearing  or  Improving  Property.  Trees  are  a  part  of  the  land,  and  the 
tenant  may  not  remove  or  use  them  except  for  fuel,  fences,  and  certain 
other  improvements ;  even  this  would  be  allowable  only  where  trees  were 
reasonably  abundant  and  the  term  of  the  lease  not  unduly  short.  Under 
some  circumstances  lands  may  be  cleared  by  the  tenant.  Tenants  in 
some  cases  have  been  held  justified  in  opening  gravel  or  clay  pits,  when  in 
the  locality  it  was  customary  to  improve  the  property  in  that  way ;  but 
the  sale  of  clay  or  gravel  by  the  tenant  for  pure  gain  would  not  be  allowable 
even  if  the  property  were  improved  thereby.  Under  some  circumstances 
buildings  even  may  be  removed,  but  this  should  never  be  done  except  under 
a  lawyer's  advice ;  the  rule  is  that  they  belong  to  the  landlord. 

Fixtures.  The  question  of  fixtures  is  also  an  important  one,  and  affects 
not  only  landlord  and  tenant,  seller  and  purchaser,  but  also  the  executor 
of  an  estate  and  the  heirs  who  inherit  the  real  estate.  In  dealing  with  these 
various  parties  engineers  necessarily  have  an  interest  in  any  transactions 
necessarily  had  with  them,  as  well  as  when  the  engineers  or  their  clients 
are  directly  parties. 


REAL  PROPERTY  6-13 

Apparatus.  In  the  case  of  a  mill,  the  engines  and  other  apparatus 
peculiar  to  the  business  go  as  part  of  the  realty ;  but  a  steam  engine  equally 
available  for  any  mill  or  manufactory  has  been  held  to  be  personal  property. 
In  a  case  of  this  sort  where  the  interests  are  large,  whether  a  sale  or  lease  is 
involved,  the  terms  of  the  sale  or  lease  should  be  made  explicit  and  the 
services  of  a  lawyer  should  be  secured. 

Specific  Agreements.  In  the  case  of  a  long  lease,  provision  may  be 
specifically  made  that  the  tenant  may  erect  certain  buildings  with  the 
privilege  of  removing  at  the  end  of  the  lease ;  in  certain  cases,  a  building 
constructed  altogether  above  ground  and  readily  removable  has  been  held 
to  be  the  personal  property  of  the  tenant  who  erected  it,  but  this  is  some- 
what abnormal. 

Minor  Fixtures.  In  the  case  of  minor  fixtures,  the  general  rule  seems 
to  be  that,  between  landlord  and  tenant,  anything  provided  by  the  tenant 
remains  his  if  easily  removed  without  injury  to  the  building;  if  its  removal 
will  injure  the  building,  it  is  a  part  of  the  realty.  In  this  way  fixtures 
applied  by  screws  might  be  considered  personal  property,  while  similar 
fixtures  attached  by  nails  would  be  realty.  Gas  fixtures  seem  to  be 
personal  property.  It  is  often  possible  in  a  sale  or  lease  to  agree,  in  writing, 
upon  matters  otherwise  liable  to  result  in  disagreement. 

TENANTS  IN   COMMON 

Tenants  in  Common.  The  case  of  tenants  in  common  deserves  con- 
sideration. This  is  not  a  case  of  landlord  and  tenant;  for  instance, 
where  two  or  more  tenants  occupy  separate  parts  of  a  house  or  office  or 
farm.  The  case  of  tenants  in  common  occurs  when  two  or  more  parties 
by  inheritance,  perhaps,  have  each  an  interest  or  estate  in  lands,  interests 
which  are  not  separable,  so  that  the  tenants  hold  in  common.  A  simple 
case  is  where  two  persons  inherit  together  a  piece  of  land  by  descent  or 
by  will.  Neither  can  then  convey  any  specific  part  of  the  lands ;  it  requires 
the  action  of  both ;  but  either  may  convey  his  undivided  interest.  The 
tenancy  in  common  may  be  terminated  by  conveyances  portioning  the 
lands,  or  partition  may  be  forced  through  legal  process.  Ordinarily, 
tenants  in  common  will  hold  equal  estates,  but  by  will  or  conveyance  one 
may  acquire  an  estate  in  fee  simple,  the  other  a  life  estate ;  and  other  cases 
may  occur. 

EASEMENTS 

Definition.  An  "  easement  "  has  been  defined  as  the  right  which  the 
public  or  an  individual  has  in  the  lands  of  another,  not  inconsistent  with 
the  property  of  the  latter.  When  a  man  has  the  right  to  have  surface  water 
flow  over  his  lands,  or  upon  the  lands  of  another,  or  to  have  a  brook  flow 


6-14  REAL  PROPERTY 

past  another's  lands  upon  his  own,  there  is  a  "  natural  easement."  The 
right  of  support  to  his  soil  against  his  neighbor  is  another  case. 

Actual  Grant.  An  express  permission  or  right  of  way  across  one's 
lands  makes  an  easement  by  "  actual  grant,"  and  the  Statute  of  Frauds 
requires  that  this  must  be  in  writing ;  the  terms  are  shown  by  the  writing. 

Implied  Grant.  If  a  man  sells  a  back  lot  accessible  only  through 
the  front  lot,  the  law  provides  an  easement  by  "  implied  grant,"  a  right  of 
way  over  the  front  lot.  Even  then  a  lawsuit  may  be  necessary  to  settle 
which  part  of  the  front  lot  shall  be  so  used.  It  is  wise,  therefore,  in  making 
such  a  purchase  or  such  a  sale,  to  have  a  writing  defining  the  easement, 
the  right  of  way.  Where  an  easement  by  actual  grant  or  by  implied  grant 
has  been  given,  a  deed  to  such  land  can  hardly  be  given  "  free  from  all 
incumbrances. " 

Prescription.  When  an  apparent  right  or  privilege,  such  as  the  use  of  a 
path  across  a  lot,  has  been  enjoyed  for  a  long  time,  an  easement  by  "  prescrip- 
tion "  is  secured.  The  occupation  or  use  must  be  adverse,  that  is,  to  the 
disadvantage  of  the  owner,  without  permission,  or  under  some  apparent 
claim  of  right,  and  open  and  reasonably  known  to  the  owner.  It  must  also 
be  uninterrupted  and  frequent  enough  to  have  the  quality  of  continuity. 
The  length  of  time  in  many  States  is  twenty  years.  Similarly  the  failure 
to  use  an  easement  by  prescription  for  twenty  years  presumes  an  abandon- 
ment of  the  right.  In  England,  an  easement  to  the  use  of  light  and  air 
could  be  acquired  by  prescription,  but  that  appears  not  to  be  the  case 
in  this  country  now. 

It  is  well  that  the  engineer  should  know  that  title  to  the  land  itself 
may  sometimes  be  acquired  by  prescription,  so  that  occupation  adverse 
to  the  formal  title  should  not  be  passed  over  too  lightly  when  lands  are 
to  be  acquired  and  an  owner  compensated. 

The  laws  controlling  title  by  prescription  are  contradictory  in  different 
States  and  a  lawyer  is  necessary  to  pass  upon  such  titles. 

LICENSES 

Definition.  A  "  license  "  is  inferior  to  an  easement ;  it  is  only  an 
authority  to  do  a  certain  act  or  acts  upon  another's  land.  •  There  is  no 
necessity  that  it  be  in  writing.  It  may  be  expressed  or  implied.  An  im- 
plied license  is  granted  ordinarily  to  enter  the  premises  for  people  to  do 
business  with  the  occupant,  but  not  for  other  purposes  than  transacting 
such  business. 

MORTGAGE 

Definition.  A  mortgage  is  a  conditional  conveyance  of  an  estate  as  a 
pledge  for  the  security  of  a  debt,  and  to  become  void  if  the  debt  is  repaid. 


REAL  PROPERTY  6-15 

Commonly  the  debt  is  evidenced  by  a  promissory  note,  for  which  the  mort- 
gage is  security.  The  note  is  then  a  personal  claim  against  the  mortgagor, 
in  addition  to  the  mortgage ;  without  the  note,  the  mortgagee  can  look  to 
the  land  alone  for  satisfaction.  The  mortgage,  like  other  deeds,  must  be 
recorded. 

Legal  Title.  The  legal  title  is  considered  to  rest  in  the  mortgagee ; 
but  in  equity  the  mortgagor  remains  the  actual  owner  and  holds  a  legal 
title  against  everyone  except  the  mortgagee;  until  debarred  by  his  own 
default  or  legal  decree,  he  is  entitled  to  possession,  can  convey  his  estate, 
and  in  case  of  death  the  estate  goes  to  his  heirs,  in  all  cases  subject  to  the 
mortgage.  In  case  of  non-payment,  the  mortgagee  may  have  the  mortgage 
foreclosed,  the  property  sold,  and  this  is  commonly  provided  for  in  the 
mortgage  deed. 

Equity.  In  Equity,  although  the  mortgage  may  provide  that  title  to 
the  property  shall  rest  permanently  in  the  mortgagee,  in  case  the  mortgage 
note  is  not  paid  at  the  required  time,  the  mortgagor  holds  an  "  equity  of 
redemption"  for  a  time;  the  direct  and  immediate  forfeiture  of  the  prop- 
erty has  the  character  of  a  penalty  which  the  law  abhors.  The  length 
of  time  for  redemption  is  commonly  denned  by  statute.  The  foreclosure 
of  a  mortgage  is  not  a  job  for  the  layman,  but  for  the  practising  lawyer. 
The  making  of  a  mortgage  upon  a  well  established  blank  form,  however,  is 
not  an  intricate  affair,  after  it  has  once  been  understood.  The  subject  of 
mortgages  has  received  attention  in  the  preceding  chapter  on  Equity. 

Release  of  Mortgage.  A  mortgage  is  sometimes  released  by  an  entry 
made  on  the  margin  of  the  book  in  which  the  mortgage  is  recorded.  A 
better  method  is  to  have  a  formal  release  of  mortgage  and  record  this.  In 
case  of  loss  of  the  book  of  records  by  fire  or  otherwise,  the  release  may 
be  valuable,  although  the  mortgage  itself  with  the  note  has  probably  been 
surrendered  to  the  mortgagor  at  the  time  of  payment. 

ACQUIREMENT   OF  LANDS   FOR  ENGINEERING  PROJECTS 

Methods  of  Securing  Lands.  Where  lands  are  required  for  engineer- 
ing projects,  there  are  several  ways  in  which  they  may  be  secured.  Some- 
times the  advantage  to  a  community  or  to  individuals  is  such  that  the 
lands  are  given  gratis.  In  other  cases,  the  engineering  improvement, 
perhaps  a  railroad,  seems  so  desirable  that  the  people  owning  the  required 
lands  are  willing  to  sell  at  very  favorable  prices,  and  it  is  not  uncommon 
that  an  agreement  to  sell  may  be  made  by  the  payment  of  a  very  small  sum. 
In  such  a  case,  the  agreement  or  bond  for  a  later  deed  should  be  in  writing. 
It  is  desirable  to  have  it  acknowledged  and  also  recorded  so  that  anybody 
buying  the  land  shall  buy  it  subject  to  notice  of  such  agreement.  A  large 


6-16  REAL   PROPERTY 

share  of  transactions,  however,  are  by  simple  bargain  between  the  parties 
and  the  passing  of  a  deed,  either  at  once  or  with  reasonable  promptness. 

EMINENT  DOMAIN 

Definition.  When  the  owner  of  land  refuses  to  sell,  and  the  improve- 
ment is  of  a  public  character,  the  law  allows  that  land  shall  be  taken  by  the 
sovereign,  the  State,  under  what  is  called  the  "  right  of  eminent  domain." 
It  is  the  law  that  private  lands  can  not  be  taken  by  another  for  a  private 
use ;  but  many  improvements  of  great  importance  to  the  community  as  a 
whole,  would  become  impossible  if  private  lands  could  never  be  taken 
without  the  owner's  consent.  For  the  purposes  of  a  street,  or  a  sewer, 
for  the  laying  of  a  water  pipe,  also  for  the  purpose  of  building  a  railroad, 
in  which  as  a  public  carrier  the  public  has  rights,  it  is  held  that  the  project 
is  a  public  use,  so  that  the  legislature  is  justified  in  granting  to  the  city, 
or  town,  or  to  the  railroad,  the  right  to  take  the  lands  by  this  "  right  of 
eminent  domain."  In  some  States,  lands  may  be  thus  taken  for  water 
power. 

General  Procedure.  The  general  procedure  in  most,  and  perhaps  all 
States  is  this.  It  is  essential  that  no  agreement  can  be  reached  between  the 
parties,  and  in  order  that  there  may  be  disagreement,  it  is  necessary  that 
the  city  or  railroad  shall  make  the  owner  an  offer  which  he  refuses,  and  that 
the  owner  shall  name  his  price  which  the  city  or  railroad  refuses,  or  else 
that  the  owner  refuses  to  name  any  price. 

Disagreement.  There  must  be  a  definite  failure  to  agree.  In  the  case 
of  minors  who  hold  title  to  the  property,  it  may  be  impossible  from  the 
legal  standpoint  that  any  agreement  should  be  reached,  as  the  minor  can 
not  make  any  agreement. 

Commissioners.  After  disagreement,  taking  the  case  of  a  railroad, 
the  railroad  applies  to  the  court  for  the  appointment  of  commissioners  to 
value  the  land ;  in  many  States  a  commission  of  three  is  appointed,  com- 
monly by  the  court.  In  some  States,  as  in  Massachusetts,  the  three 
County  Commissioners  in  which  the  land  lies,  are  by  law  designated  as  the 
commissioners  to  determine  the  value  of  the  property  taken.  These 
commissioners  view  the  land,  if  they  see  fit,  take  such  testimony  as  they 
care  to,  and  make  their  report  or  award  to  the  court.  After  this  award  is 
made,  if  each  of  the  parties  is  satisfied  or  does  nothing  further,  the  land 
becomes  the  property  of  the  railroad  on  payment  of  the  specified  sum.  In 
case  either  party  is  dissatisfied  with  the  award,  an  appeal  is  taken  and  the 
case  is  tried  before  a  jury,  in  this  way  preserving  the  rights  which  the 
owner  had  that  he  may  not  be  deprived  of  his  property  "  without  due  pro- 
cess of  law,"  and  without  "  just  compensation." 


REAL  PROPERTY  6-17 

Right  Comes  from  Statute.  The  exercise  of  this  right  is  provided  by 
statute,  and  this  must  be  carefully  examined  in  each  case  to  find  what  in 
detail  are  the  proceedings  required,  and  what  powers  are  delegated.  The 
measure  of  damage  in  such  cases  is  the  difference  in  value  between  the 
lands  previous  to  the  taking,  and  the  value  of  what  is  left,  and  this  is 
determined  by  the  commission  or,  in  case  of  appeal,  by  a  jury ;  it  is  found 
that  outside  of  cities,  lands  taken  for  railroads  very  frequently  cost  about 
three  times  the  value  of  real  estate  in  the  neighborhood. 

MECHANIC'S  LIEN 

Definition.  When  structures  had  been  erected  on  land,  it  was  some- 
times found  that  the  builder  failed  to  pay  his  men,  and  a  statute  was 
passed  to  protect  the  workmen,  under  what  is  known  as  the  "  mechanic's 
lien."  It  seemed  that  the  owner  of  the  land  and  structure  could  better 
protect  himself  than  could  the  workmen.  As  a  result,  Statute  Law  has 
been  provided  so  that  a  workman  who  has  not  been  paid  by  his  employer, 
the  contractor  or  builder,  may  now  look  for  his  pay  to  the  building  on  which 
he  worked,  together  with  the  land  on  which  it  stands.  He  has  the  privilege 
of  bringing  suit,  in  some  States  within  ninety  days,  and  filing  his  "  mechan- 
ic's lien  "  against  the  structure  and  the  land  it  occupies,  and  may  after 
the  proper  proceedings  have  it  sold  to  recoup  himself. 

Materials.  In  some  States  and  under  some  circumstances,  the  man 
who  has  furnished  materials  has  a  similar  lien.  The  remedy  in  either  case 
is  one  provided  by  statute,  and  the  statute  must  be  strictly  observed  and 
followed  in  all  proceedings  under  it. 

BOUNDARIES 

Classification.  Boundaries  are  marked  by  monuments  of  two  sorts,  — 
natural  and  artificial,  by  marks  existing  or  placed.  Natural  monuments 
are  streams,  lakes,  ponds,  shores  and  beaches,  highways  and  streets, 
walls,  fences,  trees,  springs,  rocks.  Artificial  monuments  are  those  placed 
by  man  to  mark  a  point,  a  line,  a  corner.  A  stone  bound,  a  piece  of  gas 
pipe,  a  small  sewer  pipe,  a  pile  of  stones,  a  mound  of  earth,  a  stake,  have 
all  been  used.  The  permanence  of  a  stone  bound  commends  it,  as  com- 
pared with  a  mound  of  earth  or  a  stake.  Natural  boundaries  are  in  general 
superior  to  artificial  in  certainty ;  for  precision,  a  good  artificial  bound  is 
superior. 

Evidence  as  to  Boundaries.  The  deed  is  commonly  the  best  evidence 
of  boundaries  of  land  determined  by  this  deed.  In  determining  boundaries, 
two  principles  of  the  Common  Law  prevail;  first,  the  intent  governs; 
second,  a  boundary  fixed  and  determined  by  monuments  will  be  retained 


6-18  REAL  PROPERTY 

and  not  give  way  to  boundaries  indicated  by  distances  and  courses,  in 
the  absence  of  fraud  in  setting  the  monuments. 

Certainty  and  Stability.  It  is  quite  as  important  to  have  a  monument 
or  boundary  certain  and  well  established  as  to  have  it  technically  right. 
Stability  and  certainty  are  more  important  than  great  technical  accuracy 
or  precision.  This  principle  is  well  recognized  as  to  the  Public  Land  Sur- 
veys, by  a  United  States  statute  providing  that  corners  located  in  the  field 
remain  the  correct  corners,  even  if  seriously  inaccurate,  "  irrespective 
of  whether  they  were  properly  located  in  the  first  place  or  not."  It  is  not 
in  the  power  of  an  individual  or  of  any  State  to  correct  them.  First  and 
last,  much  poor  surveying  has  been  done  on  the  Public  Land  Surveys,  and 
the  rule  is  a  good  one. 

Defects  of  Description.  Ordinarily,  a  landowner  is  not  a  surveyor 
and  the  boundary  which  he  knows,  is  what  can  be  seen  on  the  ground  rather 
than  imaginary  lines  determined  by  the  survey.  Inaccurate  or  imperfect 
work  is  always  possible  in  a  description  by  courses  and  distances,  instru- 
ments may  be  out  of  order,  measuring  difficult  in  rough  ground,  while 
errors  are  always  possible ;  monuments  commonly  are  certain. 

Relative  Values.  The  relative  values  then  are  normally  in  this  order : 
natural  objects,  artificial  marks,  courses  and  distances,  quantity  of  land. 

Monuments.  As  a  rule  then,  monuments  control  against  courses 
and  distances,  the  latter  often  helping  to  identify  the  monuments  described 
and  to  determine  between  conflicting  monuments ;  but  monuments,  when 
certain,  control  even  where  courses  and  distances  show  a  wide  departure 
from  them,  and  the  line  from  one  monument  to  another  is  straight  if  not 
otherwise  described. 

Courses  and  Distances.  Courses  and  distances  sometimes  give  much 
better  results,  to  an  extent  to  indicate  a  probable  intent  to  adopt  the 
boundaries  indicated  by  them;  in  such  case  they  will  prevail  against 
monuments.  Such  instances  will  probably  be  rare. 

Quantity  of  Land.  In  a  similar  way,  the  quantity  of  land  is  sometimes 
the  primary  and  clear  intent  of  the  deed,  and  this  may  then  take  precedence 
over  courses  and  distances. 

Where  no  monuments  can  be  found,  courses  and  distances  control.  In 
case  of  a  discrepancy  between  the  monuments  on  the  one  hand,  and  a 
survey  by  courses  and  distances  on  the  other,  it  may  be  well  to  consider 
the  possibility  of  disturbance  of  the  monument,  if  artificial,  whether  by 
accident  or  by  fraud.  In  one  case  it  was  decided  that  a  monument  referred 
to  in  a  deed  and  placed  soon  after,  was  good,  but  not  one  set  long  after 
by  one  of  the  interested  parties  without  notice  to  the  others.  In  another 
case  it  was  held  that  a  stake  is  a  frail  witness,  but  when  nothing  better  is 
found,  it  may  be  conclusive  as  a  monument. 


REAL   PROPERTY  6—19 

Variation  of  Needle.  Where  lines  were  originally  run  by  compass,  the 
variation  of  the  needle  when  the  line  was  run  must  be  determined;  the 
responsibility  of  determining  the  amount  of  variation  rests  with  the  jury,  who, 
however,  must  decide  this  from  the  testimony  of  the  surveyors  or  others 
regarding  it.  In  such  survey  the  term  "  true  north  "  probably  means  the 
true  north  of  the  needle,  the  magnetic  north,  but  the  intent  must  be  sought. 

Lines  of  Adjoining  Tracts.  Where  lines  and  corners  of  an  adjoining 
tract  are  called  for,  these  govern,  if  sufficiently  established,  whether 
marked  by  monuments  or  not,  and  where  nothing  to  the  contrary  restrains 
it,  a  survey  goes  to  the  adjoining  tracts.  Where  no  monuments  mark 
either  line,  and  a  vacant  space  exists  between  two  tracts  called  for  as  adja- 
cent lands,  the  vacant  space  will  be  apportioned  between  the  two  in  pro- 
portion to  their  respective  interests.  Where  two  ^  surveys  overlap,  the 
first  surveyed  is  superior.  When  there  are  conflicting  descriptions  in 
the  same  deed,  that  most  favorable  to  the  grantee  prevails,  in  the  absence 
of  intent  to  govern  it ;  the  grantor  probably  wrote  the  deed,  and  it  will  be 
construed  against  him. 

Replacing  Corners  of  Public  Lands.  It  has  been  stated  that  the  corner 
once  located  by  the  surveyor  in  the  Public  Land  Surveys  stands  as  the 
correct  corner ;  if  obliterated  in  any  way,  it  must  be  replaced  in  its  original 
position,  and  oral  evidence  is  admissible  to  show  where  it  stood.  If  it  is 
"  lost  "  because  nobody  remembers  where  it  stood,  it  must  be  replaced  by 
re-running  the  old  line.  For  this  purpose,  the  field  notes  of  the  original 
survey  should  be  consulted  and  used  to  furnish  a  guide  to  the  new  survey, 
which  should  endeavor  to  follow  the  original  line  in  direction,  precision, 
and  in  every  respect,  and  in  this  way  replace  the  lost  corner  as  closely  as 
possible.  The  manual  and  circulars  of  the  General  Land  Office  should  be 
consulted  carefully  as  a  guide  to  the  procedure  to  be  followed.  It  is  evident 
that  the  section  corners  of  the  Public  Land  Surveys  will  often  be  also 
the  corner  bounds  of  property. 

Waters  as  Boundaries.  Waters  are  often  natural  boundaries,  and  it 
becomes  important  to  know  what  water  line  to  use.  It  appears  to  be  the 
law  that  the  boundary  of  tidal  waters  is  the  line  of  ordinary  high  tide. 
The  shore  between  high  and  low  tide  belongs  to  the  State.  This  is  the  law 
unless  modified  by  statute.  For  example,  a  very  old  statute  of  Massachu- 
setts provides  that  the  boundary  extends  to  low  water  mark  or  to  100  rods 
from  high  water  mark  if  this  does  not  extend  to  low  water  mark.  Where 
the  description  is  "  by,"  "  upon,"  "  to,"  or  "  along  "  the  shore  the  author- 
ities are  conflicting  as  to  whether  this  means  high  or  low  water.  In  the 
case  of  small  tidal  creeks,  some  courts  have  ruled  in  certain  cases  that  the 
boundary  was  the  thread  of  the  creek.  In  the  case  of  navigable  non-tidal 
rivers,  there  is  much  confusion  as  to  the  law  in  different  States. 


6-20  REAL  PROPERTY 

Non-navigable  Streams.  With  non-navigable  streams,  the  rule  is  that 
the  boundary  extends  to  the  thread  of  the  stream.  Deeds  sometimes  read 
"  to  the  bank  or  shore  "  and  sometimes  mention  a  monument  on  the  bank. 
In  all  such  cases,  with  various  forms  of  wording,  the  intent  must  be  looked 
for,  bearing  in  mind  that  in  general  a  writing  means  what  it  says;  a 
monument  is  sometimes  placed  on  the  bank  because  it  is  impracticable  to 
place  it  in  the  thread  of  the  stream.  Where  the  natural  boundary  called 
for  is  a  natural  lake  or  large  pond,  the  low  water  line  is  the  limit.  With 
non-navigable  lakes  or  ponds  there  are  many  decisions  favoring  the  center 
or  thread  of  the  lake  or  pond ;  with  artificial  lakes,  the  boundary  reaches 
to  the  thread,  although  in  the  cases  of  some  lakes  of  great  age,  they  seem 
to  have  acquired  the  low  water  boundary. 

Streets  and  Highways.  With  streets  and  highways,  as  a  rule,  the  title 
to  the  abutting  lands  extends  to  the  middle  of  the  street.  The  descriptions 
in  such  cases  often  read  "  bounded  by  such  a  street."  Sometimes  the  descrip- 
tion says  bounded  "  by  the  south  side  of  the  street,"  and  under  these  concti- 
tions,  the  boundary  has  in  many  cases  been  held  to  be  the  side  of  the  street, 
but  not  in  all  cases.  The  decision  sometimes  rests  upon  the  point  of  who 
owned  the  lands  occupied  by  the  street  before  it  came  into  use  as  a  street. 
While  the  title  may  extend  to  the  middle  of  the  street,  the  public  has  an 
"  easement  "  in  the  street  for  all  legitimate  public  uses.  If  abandoned  as 
a  street,  the  land  will  ordinarily  revert  to  the  abutting  owner. 

Evidence  as  to  Boundaries.  In  the  case  of  doubtful  or  disputed 
boundaries,  the  ordinary  rules  of  evidence  seem  often  to  be  set  aside  if 
by  this  means  it  be  possible  to  more  readily  reach  the  facts,  where  the 
conditions  are  little  liable  to  abuse.  In  such  cases  oral  evidence  is  admitted 
to  show  where  corners  stood  or  to  clear  up  ambiguities  in  the  descriptions 
of  deeds.  Declarations  of  persons  deceased  are  competent  if  made  pre- 
vious to  the  suit,  if  they  had  special  means  of  knowledge  and  were  then 
disinterested.  Declarations  of  a  man  against  interest  have  been  admitted 
not  only  against  himself  but  also  against  others  claiming  under  him. 
General  repute  is  also  competent  evidence,  and  ancient  maps  are  accepted 
as  repute.  Where  a  deed  refers  to  another  deed  or  a  map,  this  becomes  a 
part  of  the  deed.  The  engineer  or  surveyor  engaged  upon  boundaries 
in  litigation  should  confer  fully  with  his  lawyer  on  such  matters  if  oppor- 
tunity offers,  as  the  introduction  of  such  evidence  is  very  technical ;  in  some 
cases,  he  must  do  the  best  he  can  before  he  has  a  chance  to  see  his  lawyer. 

Boundary  by  Prescription.  A  wall  or  fence  forming  the  division  or 
boundary  line  between  two  pieces  of  land,  if  it  has  been  unchanged  for  the 
requisite  period,  ordinarily  twenty  years,  will  by  prescription  become  the 
true  boundary,  although  differing  from  that  called  for  by  deed.  Away 
from  cities,  farm  lands  bounded  by  wall  and  fences  often  have  no  deed 


REAL  PROPERTY  6-21 

description  which  determines  lines  with  precision.  In  such  cases  these 
walls  and  fences,  as  natural  boundaries,  fix  the  lines. 

In  cities  also,  even  where  a  tract  has  been  divided  into  lots  and  plats 
filed,  the  fences  which  determine  lines  of  occupation  or  "  adverse  posses- 
sion "  for  the  requisite  time,  are  equally  the  boundaries,  by  prescription. 

Lines  of  Streets  and  Highways.  The  lines  of  streets  and  highways  as 
shown  by  fences  or  buildings  or  other  natural  boundaries,  also  fix  the  street 
lines  in  the  absence  of  formal  previous  determination  of  such  lines  by  the 
proper  town,  city,  or  county  authorities,  provided  they  have  existed  for 
the  necessary  period  of  time.  Touching  this,  however,  there  often  is 
statute,  or  ordinance,  or  other  legislative  authority,  and  the  surveyor  should 
make  himself  familiar  with  any  such  legislation. 

Authority  of  Municipal  Engineers  and  Surveyors.  It  should  be  clearly 
understood  that  the  official  character  possessed  by  a  City  Engineer  or 
Surveyor  or  a  similar  town  or  county  officer,  does  not  commonly  give  him 
greater  authority  to  determine  lines  than  is  possessed  by  other  competent 
surveyors.  Boundaries  are  fixed  by  the  rules  of  Common  Law  or  by 
statute,  and  the  surveyor  can  do  no  more  than  give  expression  to  these. 

Vested  Rights.  A  new  street  line,  fixed  by  a  City  Council  under  its 
proper  powers,  may  change  the  line  of  a  street,  but  if  lands  of  abuttors  are 
taken  beyond  the  fence  lines  fixing  boundaries  by  prescription,  such  lands 
must  be  paid  for;  no  official  action  may  do  away  with  vested  rights. 

Evidence  of  Boundaries  by  Prescription.  Ordinarily  the  survey  shows 
the  lines  of  fences  as  existing,  and  the  period  for  which  they  have  so  existed 
is  a  matter  of  fact,  depending  on  evidence.  The  information  given  the  sur- 
veyor may  in  some  cases  be  incorrect,  and  may  be  overcome  in  case  a 
suit  at  law  should  follow.  A  surveyor  may  sometimes  have  old  field  notes 
which  as  evidence  would  be  substantially  conclusive.  In  the  absence  of 
this,  he  should  retain  memoranda  as  to  the  information  given  him,  as  this 
may  afterwards  be  important  if  available,  in  case  his  survey  should  be 
disputed. 

Securing  Stability  of  Surveys.  It  is  desirable  from  the  standpoint  of 
public  policy,  looking  to  certainty  and  stability,  that  surveys  made  by 
one  surveyor  should  be  accepted  by  later  surveyors  unless  clearly  incorrect. 
In  case  of  dispute,  a  line  may  often  be  satisfactorily  settled  by  conference 
between  surveyors  representing  conflicting  interests.  The  standing  of 
engineering  in  a  community  will  properly  be  advanced  by  such  harmonious 
action  between  surveyors.  Furthermore,  in  very  many  cases  the  interests 
of  the  surveyor's  client  will  be  better  served  by  a  reasonable  adjustment 
than  by  an  expensive  lawsuit. 

Descriptions.  The  engineer  or  surveyor  often  is  called  upon  to  describe 
lands  for  a  deed.  He  should  make  sure  that  his  descriptions  are  clear 


6-22  REAL   PROPERTY 

and  that  all  ambiguity  is  avoided.  If  the  deed  is  to  convey  all  the  land 
between  two  owners,  as  in  case  of  the  right  of  way  for  a  railroad,  it  is  best 
to  so  state,  further  describing  in  such  manner  as  will  best  make  the  lands 
certain,  and  follow  with  the  acreage  "  as  near  as  may  be."  On  one  rail- 
road the  description  for  right  of  way  reads  in  effect : 

"fifty  feet  on  each  side  of  the  center  line  of  the  National  Public  Railroad  as  located 
and  constructed,  between  the  lands  of  Thomas  Jenkins  on  the  North,  and  Ezra 
Perkins  on  the  South;  the  same  extending  from  station  102  +  63.2  to  110  +  27.9 
and  containing  one  and  seventy-six  hundredths  acres  as  near  as  may  be." 

The  apparent  intent  is  to  convey  all  the  lands  necessary  to  the  railroad 
lying  between  Jenkins7  and  Perkins'  lands ;  the  stations  mark  the  general 
locality  and  the  acreage  shows  the  amount  of  land. 


CHAPTER  VII 
CORPORATIONS 

Business  Associations.  In  conducting  business,  associations  of  persons 
are  not  always  corporations.  Partnerships  for  such  purposes  existed 
before  corporations  seemed  necessary  and  a  consideration  of  partnership 
is  desirable  before  considering  corporations. 

PARTNERSHIP 

Definition.  When  two  or  more  competent  parties  unite  their  resources 
and  interests,  by  agreement  with  each  other  to  carry  on  some  common 
legal  business  and  to  share  in  the  profits  or  losses,  the  relation  of  partner- 
ship results.  It  is  not  necessary  that  all  of  the  resources  and  interests  of 
a  partner  shall  be  engaged  in  the  partnership.  A  contract  is  essential, 
and  the  intent  to  form  a  partnership  governs,  at  least  between  the  part- 
ners. Where  a  corporation  is  formed  in  accordance  with  statutory  provi- 
sions, the  association  is  not  that  of  partnership. 

Agreement.  The  agreement  should  be  in  writing  and  clearly  define 
the  terms  of  the  partnership.  The  mutual  agreements  constitute  the 
considerations  which  are  necessary  to  any  contract.  The  partners  need 
not  either  contribute  equally  or  share  equally  in  the  profits  or  losses.  One 
member  may  contribute  money  or  other  property,  another  may  con- 
tribute only  experience.  The  services  rendered  may  require  the  entire 
time  of  one  partner  and  a  portion  only  of  another's.  The  profits  may  be 
divided  in  any  proportion  agreed  upon.  In  some  partnerships,  each  mem- 
ber may  be  allotted  a  salary,  not  necessarily  equal,  and  the  profits  may  be 
divided  in  proportion  to  the  capital  contributed  by  each.  The  partner- 
ship contract  should  clearly  define  all  such  matters,  as  well  as  provide  for 
winding  up  the  partnership  affairs  in  case  of  dissolution  either  through  death 
or  other  contingency.  It  is  worth  while  to  employ  a  lawyer  to  pass  upon 
any  partnership  agreement  or  perhaps  to  prepare  it. 

Property.  —  Partnership  property  is  that  agreed  to  be  devoted  to 
partnership  purposes.  It  ordinarily  includes :  1.  The  capital  contributed 

7-1 


7—2  CORPORATIONS 

by  the  partners.  2.  Property  otherwise  acquired  in  partnership  trans- 
actions. 3.  Good- will. 

Capital  is  not  necessarily  in  money.  It  may  be  in  any  form  of  property. 
Real  property,  however,  may  not  be  acquired  in  the  firm  name.  The  legal 
title  may  be  held  by  the  individuals  comprising  the  firm.  Either  real  or 
personal  property  may,  by  agreement,  be  vested  in  a  member  of  the  firm 
for  the  benefit  of  the  partnership,  provided  this  be  not  to  the  disadvantage 
of  third  parties ;  the  firm  must  be  solvent  at  the  time. 

Good-Will.  Good-will  is  substantially  the  capitalized  value  of  the 
habit  or  inclination  of  customers  and  their  acquaintances  to  deal  with  a 
going  concern.  The  advantages  of  location,  the  necessity  to  use  certain 
qualities  of  goods,  and  many  other  elements  enter  into  it.  A  monopoly 
of  product,  or  peculiar  opportunity,  may  underlie  this  good-will.  While 
it  is  intangible  and  cannot  well  be  sold  separately,  in  selling  partnership 
property,  or  in  adjusting  values  in  dissolving  a  firm,  considerable  value 
may  properly  be  assigned  to  it.  The  reputation  gained  under  a  firm  name 
may  be  a  part  or  even  the  whole  of  good-will. 

Firm  Name.  The  agreement  should  state  the  name  or  title  under  which 
the  partnership  or  "  firm  "  shall  be  carried  on.  It  may  be  under  any  name 
desired  provided  this  does  not  interfere  with  the  rights  of  others  acquired 
by  the  use  of  the  same  name  or  another  practically  the  same.  There  are 
sometimes  statutory  provisions  regulating  this.  Partnership  contracts 
and  transactions  should  be  in  the  firm  name.  A  suit  at  law,  however,  will 
be  in  the  name  of  the  members. 

Partners,  Principals  and  Agents.  Partners  are  both  principals  and 
agents.  Each  partner  is  responsible  as  principal  for  all  liabilities  of  the 
partnership.  Each  partner  is  also  the  agent  of  the  others  in  partnership 
dealings;  admissions  or  representations  of  one  member  bind  the  firm. 
The  act  of  one  partner  clearly  outside  the  firm's  sphere  is  not  binding  on 
the  firm,  but  may  be  ratified  by  the  other  members.  In  a  trading  or  com- 
mercial partnership  one  partner  may  purchase  and  sell  goods,  receive 
payment  and  give  receipt,  and  may  compound  claims.  He  may  insure 
firm  property,  and  engage  servants  and  agents.  He  may  draw  checks  or 
indorse  them  in  the  course  of  business,  or  take  any  necessary  action  with 
relation  to  negotiable  instruments.  For  all  business  transactions  either 
partner  signs  the  firm  name. 

Fiduciary  Character.  —  Partners  in  a  firm  stand  in  a  fiduciary  relation 
to  each  other.  No  one  of  them  may  make  private  gains  at  the  expense  of 
the  others  on  matters  in  any  way  related  to  the  business.  No  partner 
may  receive  special  compensation  except  as  agreed.  It  is  customary  for 
members  to  draw  upon  firm  funds  from  tune  to  time  in  place  of  salary, 
for  household  or  other  expenses;  to  provide  for  unequal  drawing,  the 


CORPORATIONS  7—3 

contract  should  cover  interest  on  advances  or  on  undivided  profits.  If  a 
member  contributes  real  estate  to  the  partnership  property  he  retains  the 
legal  title  and  holds  it  as  trustee.  In  a  similar  way  on  the  death  of  a 
partner,  the  other  members  hold  the  firm  property  in  trust  until  all  the 
property  is  sold  or  satisfactorily  apportioned.  Capital  should  not  be 
increased  or  diminished  except  by  agreement.  Some  firms  allow  mem- 
bers to  leave  their  profits  to  draw  interest  or  a  share  of  the  profits ;  others 
prohibit  this,  partly  because  a  large  accumulation  of  this  sort  may  become 
a  serious  matter  to  handle  in  case  of  the  death  of  such  a  member.  Proper 
accounts  should  be  kept  to  which  all  partners  should  have  free  access. 
In  firm  meetings  the  majority  rules,  but  the  acts  of  this  majority  must  be 
in  good  faith. 

Liability  to  Third  Persons.  —  One  of  the  most  important  points  in  the 
law  touching  partnerships  is  that  each  partner  is  liable  to  third  persons 
to  the  full  amount  of  all  debts  of  the  firm.  He  is  liable  not  merely  to  the 
amount  he  has  invested  in  the  partnership,  but  to  the  extent  of  his  entire 
financial  ability.  Another  member  of  the  firm  who  has  contracted  the 
debt  has  done  so  as  agent  of  all  the  others,  each  of  whom  is  fully  bound. 
The  creditor  is  not  restricted  primarily  to  firm  property ;  he  may  pursue 
his  remedy  against  an  individual  member  and  may  reach  his  personal 
property.  The  firm  member  may,  however,  recoup  himself  by  proper 
action  in  Equity  against  his  partners  if  they  own  anything.  The  firm 
is  liable  for  the  torts  of  a  member  while  acting  as  agent  of  the  firm. 

Limited  Partnerships.  The  statutes  of  some  States  allow  "  limited  " 
partnerships,  in  which  at  least  one  member  must  be  a  general  partner 
and  have  general  liability  while  the  liability  of  others  is  limited  to  the 
amounts  they  have  paid  into  the  business.  Notice,  by  filing  the  partner- 
ship agreement,  is  commonly  required  as  suitable  protection  to  third 
parties  as  well  as  to  the  limited  partner.  Similarly  there  are  sometimes 
special  partners,  unknown,  dormant,  secret  partners,  whose  connection 
with  the  firm  is  quite  unknown  to  outsiders  and  who  assume  no  liability. 
To  the  contrary,  any  ostensible  partner  who  has  the  appearance  of  a  firm 
member  will  be  held  liable  to  third  parties  whether  he  has  exercised  any 
voice  in  management  or  not. 

Private  Debts.  The  private  debts  of  a  member  are  not  a  liability  of 
the  firm ;  the  most  a  creditor  can  do  is  to  reach  the  interest  of  such  member 
in  the  firm.  Partnership  property  must  be  devoted  first  to  the  payment 
of  firm  debts,  and  creditors  of  the  firm  will  take  precedence  as  to  this  over 
creditors  of  individual  partners. 

Dissolution.  Dissolution  of  a  partnership  may  come  about  through 
agreement,  the  death  of  a  partner,  or  the  decree  of  a  court.  The  winding 
up  of  the  partnership  may  be  provided  for  by  statute.  It  may  be  effected 


7-4  CORPORATIONS 

by  the  surviving  partners  continuing  in  control  as  trustees.  Sometimes  a 
receiver  is  appointed.  Sometimes,  without  a  receiver,  an  accounting  is 
ordered  by  the  court. 

Proof  of  Partnership.  The  existence  of  the  relation  of  partnership  is 
sometimes  in  question,  perhaps  between  the  immediate  parties,  perhaps  on 
the  part  of  some  third  person.  Common  ownership  does  not  assure  the 
relation,  nor  does  the  sharing  of  profits  always  do  so,  but  an  agreement  to 
share  profits  is  prima  facie  evidence  of  partnership.  Engaging  in  an  enter- 
prise as  co-owners,  where  profits  are  to  be  shared  does  constitute  partner- 
ship. To  prove  partnership  a  stricter  rule  prevails  when  the  question 
arises  between  partners  than  where  it  arises  between  partners  on  one  side 
and  third  parties  on  the  other.  General  reputation  may  readily  serve  in  the 
latter  case.  There  is  involved  a  mixed  question  of  law  and  fact;  what 
constitutes  partnership  is  law ;  the  facts  in  the  case,  if  in  dispute,  are  for 
the  jury.  The  intent  may  often  be  important.  Any  arrangement  of 
association  entered  into  by  an  engineer  should  be  made  clear,  by  writing 
preferably ;  but  in  any  case  there  should  be  sufficient  evidence  available 
to  clearly  determine  its  character. 


CORPORATIONS 

Need  for  Corporations.  When  the  steam  engine  for  manufacturing  and 
the  locomotive  for  transportation  were  well  established,  there  became 
apparent  a  need  for  large  investments  in  single  enterprises.  The  private 
fortunes  of  a  few  wealthy  men  combined  in  a  partnership  were  hardly 
sufficient,  while  there  was  considerable  capital  in  moderate  sums  seeking 
investment,  provided  the  element  of  risk  be  reduced  to  a  minimum.  The 
corporation  with  its  limited  liability  met  the  case  very  well  and  rapidly 
assumed  importance  in  the  business  world. 

Corporation  and  Partnership.  The  most  important  distinction  be- 
tween a  corporation  and  a  partnership  is  the  limited  liability  of  the  mem- 
bers of  a  corporation.  In  a  partnership  every  member  is  financially  re- 
sponsible for  all  the  debts  of  the  firm.  In  nearly  all  corporations  (National 
Banks  are  a  notable  exception)  a  stockholder's  risk  is  limited  to  the  par 
value  of  the  stock  he  holds,  part  or  all  of  which  may  have  been  paid  in, 
or  in  some  cases  only  to  the  extent  of  the  money  actually  paid  in. 

Advantages.  Additional  attractive  features  of  the  corporation  are  the 
fact  that  on  the  death  of  a  stockholder,  his  stock  is  transferred  to  another, 
with  no  effect  otherwise  on  the  corporation ;  in  a  partnership  the  death  of 
a  member  ordinarily  works  dissolution  of  the  partnership,  requiring  finan- 
cial adjustments  often  burdensome  to  the  surviving  partners.  In  a  similar 
way  a  dissatisfied  stockholder  in  a  corporation  may  withdraw  with  no 


CORPORATIONS  7-5 

effect  on  the  business,  provided  only  he  can  find  a  purchaser  for  his  stock, 
an  action  commonly  possible  in  large  corporations,  but  not  always  in  small. 
In  a  partnership,  each  member  has  power  to  act  independently  of  the 
others ;  in  a  corporation,  the  directors  cannot  act  individually,  they  act 
only  as  a  board,  and  better  unity  of  action  is  secured. 

How  Created.  A  corporation  cannot  be  created  by  mere  agreement 
between  its  members,  as  can  a  partnership ;  it  is  an  artificial  body,  deriv- 
ing its  existence  from  a  charter  granted  usually  by  or  under  a  statute  passed 
by  the  State  legislature.  In  this  country  the  State  is  the  sovereign ;  the 
federal  government  possesses  only  such  powers  as  are  found  in  the  Consti- 
tution of  the  United  States,  which  is  the  creation  of  the  States  acting  at 
first  in  convention,  together  with  such  other  powers  as  are  necessary  for 
the  exercise  of  those  expressly  conferred.  While  the  federal  government 
may,  and  does  grant  charters  to  corporations  for  certain  purposes,  yet  in 
most  cases  the  charter  is  secured  from  the  State  within  which  the  corpora- 
tion is  organized. 

Special  Charters.  Sometimes  the  corporation  is  created  under  a  spe- 
cial charter,  that  is,  by  a  special  act  or  statute ;  in  some  States,  however, 
the  constitution  specifically  forbids  this.  More  commonly,  the  corpora- 
tion is  organized  under  some  general  statute  providing  the  procedure  to 
be  followed  to  secure  a  charter,  such  as  :  holding  a  "  first  meeting/'  draw- 
ing up  the  "  articles  of  incorporation,"  filing  these,  and  complying  with 
other  required  formalities,  following  which  a  formal  certificate  of  incor- 
poration is  issued  with  the  signature  of  the  Secretary  of  State  or  other 
designated  official. 

Kinds  of  Corporations.  Corporations  differ  in  their  character  and 
purposes;  they  may  be  divided  into  classes.  Among  the  important 
classes  of  interest  here  are :  business  corporations,  covering  various  kinds 
of  manufacturing,  mining,  financial,  insurance,  or  general  mercantile 
business;  municipal  corporations,  as  cities,  towns,  counties,  school  dis- 
tricts; public  service  corporations,  such  as  railroad,  water,  light,  tele- 
graph, telephone  companies;  and  those  for  educational,  social,  and  char- 
itable purposes. 

In  addition  to  actual  corporations,  there  are  joint  stock  companies 
which  issue  transferable  shares,  but  which  are  not  organized  as  corpora- 
tions. The  legal  status  of  such  companies  seems  to  be  that  they  are  in 
effect  partnerships. 

Connecticut  Statute.  Where  a  charter  for  other  than  a  municipal  cor- 
poration is  to  be  secured,  the  following  statutes  of  Connecticut  furnish  a 
fair  sample  of  one  general  form  of  procedure.  Changes  have  at  times 
been  made  in  the  phraseology  and  arrangement  shown  here,  but  the 
general  scheme  for  incorporation  is  well  exhibited. 


7-6  CORPORATIONS 

Formation.  Any  three  or  more  persons  may  associate  to  form  a  corporation 
for  the  transaction  of  any  lawful  business,  except  that  of  a  bank,  savings  bank, 
trust  company,  building  and  loan  association,  insurance  company,  surety  or  in- 
demnity company,  steam  railroad  or  street  railway  company,  telegraph  company, 
gas,  electric  light,  or  water  company,  or  any  company  which  shall  require  the  right 
to  take  and  condemn  lands  or  to  occupy  the  public  highways  of  this  state.  Noth- 
ing herein  shall  prohibit  corporations  organized  under  the  provisions  of  this  chap- 
ter from  constructing,  maintaining,  and  operating  railroads  outside  of  this  state. 
Every  corporation  formed  under  the  provisions  of  this  chapter  shall  be  located  in 
some  town  in  this  state. 

Certificate  of  Incorporation.  The  persons  so  associated  shall  file  a  certificate, 
signed  and  sworn  to  by  all  of  them,  setting  forth:  (1)  the  name  of  the  corporation, 
which  shall  be  such  as  to  distinguish  it  from  any  other  corporation  chartered  by  or 
organized  under  the  laws  of  this  state,  and  from  any  other  corporation  engaged  in 
the  same  business  or  promoting  or  carrying  out  the  same  purposes  in  this  state, 
and  every  such  name  shall  begin  with  "  The  "  and  end  with  "  Corporation,"  or 
have  the  word  "  Incorporated  "  immediately  under  or  after  the  name;  (2)  the 
name  of  the  town  in  this  state  in  which  the  corporation  is  to  be  located;  (3)  the 
nature  of  the  business  to  be  transacted,  or  the  purposes  to  be  promoted  or  carried 
out;  (4)  the  amount  of  the  authorized  capital  stock  of  the  corporation,  which  shall 
not  be  less  than  two  thousand  dollars,  the  number  of  shares  into  which  the  same  is 
divided,  and  the  par  value  of  each  share,  which  shall  not  be  less  than  twenty-five 
dollars,  and,  if  there  be  more  than  one  class  of  stock,  a  description  of  the  different 
classes,  with  the  terms  on  which  they  are  respectively  created;  (5)  the  period,  if 
any,  limited  for  the  duration  of  the  corporation. 

Certificate  may  Contain  Additional  Provisions.  The  certificate  of  incorpo- 
ration may  also  contain  any  lawful  provisions  which  the  incorporators  may  choose 
to  insert,  for  the  regulation  of  the  business  of  the  corporation  or  for  defining  and 
regulating  the  powers  of  the  corporation,  its  officers,  directors,  and  stockholders, 
or  any  class  of  stockholders. 

Evidence  of  Corporate  Existence.  Upon  the  approval  of  the  certificate  of 
incorporation  by  the  secretary  of  state,  corporate  existence  shall  begin.  A  copy  of 
such  certificate  and  approval,  duly  certified  by  the  secretary  of  state,  under 
his  hand  and  the  seal  of  the  state,  shall  be  prima  facie  evidence  of  the  legal  exist- 
ence of  any  such  corporation. 

Power  of  Incorporators.  After  the  approval  of  the  certificate  of  incorpora- 
tion as  aforesaid,  and  until  the  directors  are  elected,  the  incorporators  shall  have 
charge  of  the  affairs  of  the  corporation,  and  may  take  such  steps  as  are  necessary 
or  proper  to  obtain  subscriptions  to  stock. 

Call  of  First  Meeting;  Waiver  of  Notice.  After  fifty  per  cent,  of  the  authorized 
capital  stock  has  been  subscribed  for,  a  majority  of  the  incorporators  shall  call  the 
first  meeting  of  the  corporation,  at  such  time  and  place  as  they  may  designate, 
by  a  notice  published  twice,  at  least  seven  days  before  the  time  designated,  in  a 
newspaper  of  this  state  having  a  circulation  in  the  town  in  which  the  corporation 
is  located;  but  such  notice  may  be  waived  by  a  writing  signed  by  all  the  subscribers 
to  the  capital  stock  and  a  majority  of  the  incorporators,  specifying  the  time  and 
place  for  said  meeting,  which  waiver  shall  be  recorded  at  length  upon  the  record 
of  the  corporation. 

Organization ;  Adoption  of  By-Laws.  At  such  meeting  including  adjournments 
thereof,  the  subscribers  for  stock  shall  perfect  an  organization,  by  the  choice 


CORPORATIONS  7-7 

of  a  temporary  clerk  and  by  the  election  by  ballot  of  three  or  more  directors  who 
are  subscribers  for  the  stock,  and  shall  adopt  by-laws  for  the  regulation  of  the 
affairs  of  the  corporation. 

Commencement  of  Business;  Certificate  of  Organization.  No  such  corpo- 
ration shall  commence  business  until  at  least  fifty  per  cent,  of  its  authorized  capital 
stock  has  been  subscribed  for  by  bonafide  subscribers;  nor  until  at  least  twenty  per 
cent,  of  such  subscriptions  has  been  paid  in,  which  payments  shall  in  every  case 
aggregate  at  least  one  thousand  dollars;  nor  until  its  directors  and  officers  have 
been  duly  elected  and  its  by-laws  adopted;  nor  until  a  majority  of  its  directors 
have  caused  to  be  filed  a  certificate  of  organization,  setting  forth:  (1)  the  amount  of 
the  authorized  capital  stock,  the  number  of  shares  into  which  it  is  divided,  and  the 
par  value  of  such  shares;  (2)  the  amount  of  each  class  of  stock  subscribed  for; 
(3)  the  amount  paid  thereon  in  cash;  (4)  the  amount  paid  thereon  in  property 
other  than  cash,  and  the  character  of  such  property;  (5)  the  amount  paid  on  each 
share  of  stock  which  is  not  paid  for  in  full;  (6)  the  name,  residence,  and  address 
of  each  of  the  original  subscribers,  with  the  number  and  class  of  shares  subscribed 
for  by  each;  (7)  that  the  directors  and  officers  of  the  corporation  have  been  duly 
elected,  and  that  its  by-laws  have  been  adopted;  (8)  the  name,  residence,  and  post- 
office  address  of  each  of  its  officers  and  directors.  A  copy  of  such  certificate,  duly 
approved  by  the  secretary  of  state  and  certified  under  his  hand  and  the  seal  of  the 
state,  shall  be  prima  facie  evidence  that  such  corporation  has  been  duly  organized 
and  is  duly  authorized  to  exercise  all  of  its  corporate  powers. 

Directors;  Term;  Quorum;  Report.  The  property  and  affairs  of  every  such 
corporation  shall  be  managed  by  three  or  more  directors,  who  shall  be  stockholders, 
and  shall  be  chosen  annually  by  the  stockholders,  at  such  time  and  place  as  may  be 
provided  by  the  by-laws.  The  directors  shall  hold  office  for  one  year  and  until 
others  are  chosen  and  qualified  in  their  stead,  and  may  fill  any  vacancy  in  their  board 
for  the  unexpired  portion  of  the  term.  A  majority  of  the  directors  shall  constitute 
a  quorum  for  the  transaction  of  business.  At  least  once  in  each  year  they  shall 
make  a  full  and  detailed  report  of  the  financial  condition  of  the  corporation  to  its 
stockholders,  which  report  shall  be  filed  with  the  treasurer  of  the  corporation  and 
be  subject  to  the  inspection  of  the  stockholders  at  all  reasonable  times. 

Officers.  The  directors  shall  choose  from  among  their  own  number  a  presi- 
dent and  shall  appoint  a  treasurer,  a  secretary  and  such  other  officers  as  the  by- 
laws shall  prescribe,  who  shall  hold  their  respective  offices  until  the  next  annual 
meeting  and  until  others  are  chosen  in  their  stead.  The  same  person  may  fill  the 
office  of  president  and  treasurer. 

Corporation  Organized.  When  the  formalities  above  set  forth  have 
been  complied  with,  the  corporation  is  then  organized  and  in  possession  of 
its  charter.  Corporations  for  educational,  social,  charitable  purposes,  in 
general  require  no  capital  stock,  and  the  statutes  provide  that  the  certifi- 
cate for  these  need  make  no  mention  of  that  feature.  Special  additional 
requirements  are  made  for  railroad,  for  insurance,  for  savings  bank  corpo- 
rations, and  the  statutes  governing  each  business  must  be  critically  exam- 
ined and  literally  followed. 

Massachusetts  Statute.  In  Massachusetts  the  requirements  in  detail 
differ  somewhat  from  those  of  Connecticut,  and  there  is  also  an  important 


7-8  CORPORATIONS 

difference  in  the  order  of  procedure,  which  the  following  extracts  from  the 
statutes  illustrate : 

SECTION  7.  Three  or  more  persons  may  associate  themselves  by  a  written 
agreement  of  association  with  the  intention  of  forming  a  corporation  under  general 
laws  for  any  lawful  purpose  which  is  not  excluded  by  the  provisions  of  section  one 
to  buy  and  sell  real  estate  or  to  distil  or  manufacture  intoxicating  liquors. 

SECTION  8.    The  agreement  of  association  shall  state:  — 

(a)  That  the  subscribers  thereto  associate  themselves  with  the  intention  of 
forming  a  corporation. 

(6)  The  corporate  name  assumed. 

(c)  The  location  of  the  principal  office  of  the  corporation  in  the  commonwealth, 
and  elsewhere  in  the  case  of  corporations  organized  to  do  business  wholly  outside 
the  commonwealth. 

(d)  The  purposes  for  which  the  corporation  is  formed  and  the  nature  of  the 
business  to  be  transacted. 

(e)  The  total  amount  of  the  capital  stock  of  the  corporation,  which  shall  not 
be  less  than  one  thousand  dollars,  to  be  authorized;  the  par  value  of  the  shares, 
which  shall  not  be  less  than  five  dollars;    the  number  of  shares  into  which  the 
capital  stock  is  to  be  divided,  and  the  restrictions,  if  any,  imposed  upon  their 
transfer;  and,  if  there  are  to  be  two  or  more  classes  of  stock,  a  description  of  the 
different  classes  and  a  statement  of  the  terms'  on  which  they  are  to  be  created  and 
of  the  method  of  voting  thereon. 

(/)  Any  other  provisions  not  inconsistent  with  law  for  the  conduct  and  regu- 
lation of  the  business  of  the  corporation,  for  its  voluntary  dissolution,  or  for  limit- 
ing, defining  or  regulating  the  powers  of  the  corporation,  or  of  its  directors  or  stock- 
holders, or  any  class  of  stockholders. 

(g)  The  subscriber  or  subscribers  by  whom  the  first  meeting  of  the  incorporators 
shall  be  called. 

(h)  The  names  and  residences  of  the  incorporators  and  the  amount  of  the 
stock  subscribed  for  by  each. 

SECTION  9.  The  first  meeting  of  the  incorporators  of  a  corporation  created  by 
special  law  shall,  unless  such  law  otherwise  provides,  be  called  by  a  notice  signed 
by  a  majority  of  the  persons  named  in  the  act  of  incorporation;  and  the  first  meet- 
ing of  the  incorporators  of  a  corporation  organized  under  general  laws  shall  be 
called  by  a  notice  signed  either  by  such  subscriber  to  the  agreement  of  association 
as  may  be  designated  therein  or  by  a  majority  of  the  subscribers  to  such  agreement; 
and  such  notice  shall  state  the  time,  place  and  purposes  of  the  meeting.  A  copy  of 
such  notice  shall,  seven  days  at  least  before  the  day  appointed  for  the  meeting,  be 
given  to  each  incorporator  or  left  at  his  residence  or  usual  place  of  business,  or 
deposited  in  the  post  office,  postage  prepaid,  and  addressed  to  him  at  his  residence 
or  usual  place  of  business,  and  another  copy  thereof,  and  an  affidavit  of  one  of  the 
signers  that  the  notice  has  been  duly  served,  shall  be  recorded  with  the  records  of 
the  corporation.  If  all  of  the  incorporators  shall  in  writing,  indorsed  upon  the 
agreement  of  association,  or,  in  the  case  of  a  corporation  created  by  special  law, 
upon  the  charter  or  a  certified  copy  thereof,  waive  such  notice  and  fix  the  time  and 
place  of  the  meeting,  no  notice  shall  be  required. 

SECTION  10.  At  such  first  meeting,  or  at  any  adjournment  thereof,  the  incor- 
porators  shall  organize  by  the  choice,  by  ballot,  of  a  temporary  clerk,  who  shall 
be  sworn,  by  the  adoption  of  by-laws  and  by  the  election  in  such  manner  as  the 


CORPORATIONS  7-9 

by-laws  may  determine  of  directors,  of  a  treasurer,  of  a  clerk  and  of  such  other 
officers  as  the  by-laws  may  prescribe.  The  temporary  clerk  shall  make  and  attest 
a  record  of  the  proceedings  until  the  clerk  has  been  chosen  and  sworn,  including  a 
record  of  such  choice  and  qualification. 

SECTION  11.  A  majority  of  the  directors  who  are  elected  at  such  first  meeting 
shall  forthwith  make,  sign  and  make  oath  to  articles  setting  forth:  — 

(a)  A  true  copy  of  the  agreement  of  association  and  the  name  of  the  subscribers 
thereto,  or  of  the  act  of  incorporation,  as  the  case  may  be. 

(6)  The  date  of  the  first  meeting  and  of  the  successive  adjournments  thereof, 
if  any. 

(c)  The  amount  of  capital  stock  then  to  be  issued;  the  amount  thereof  to  be 
paid  for  in  full  in  cash;   the  amount  thereof  to  be  paid  for  in  cash  by  instalments 
and  the  instalment  to  be  paid  before  the  corporation  commences  business ;  and  the 
amount  thereof  to  be  paid  for  in  property.     If  such  property  consists  in  any  part 
of  real  estate,  its  location,  area  and  the  amount  of  stock  to  be  issued  therefor  shall 
be  stated;  if  any  part  of  such  property  is  personal,  it  shall  be  described  in  such  detail 
as  the  commissioner  of  corporations  may  require,  and  the  amount  of  stock  to  be 
issued  therefor  stated.     If  any  part  of  the  capital  stock  is  issued  for  services  or 
expenses,  the  nature  of  such  services  or  expenses  and  the  amount  of  stock  which  is 
issued  therefor  shall  be  clearly  stated. 

(d)  The  name,  residence  and  post  office  address  of  each  of  the  officers  of  the 
corporation. 

The  directors  who  sign  such  articles  shall  be  jointly  and  severally  liable  to  any 
stockholder  of  the  corporation  for  actual  damages  caused  by  any  statement  therein 
which  is  false  and  which  they  know  to  be  false. 

SECTION  12.  The  articles  of  organization  and  the  record  of  the  first  meeting 
of  the  incorporators  shall  be  submitted  to  the  commissioner  of  corporations,  who 
shall  examine  them  and  who  may  require  such  amendment  thereof  or  such  addi- 
tional information  as  he  may  consider  necessary.  If  he  finds  that  the  articles 
conform  to  the  provisions  of  the  preceding  sections  relative  to  the  organization  of 
the  corporation,  he  shall  so  certify  and  indorse  his  approval  thereon.  Thereupon, 
the  articles  shall,  upon  payment  of  the  fee  hereinafter  provided,  be  filed  in  the 
office  of  the  secretary  of  the  commonwealth,  who  shall  cause  them  and  the  indorse- 
ment thereon  to  be  recorded,  and,  except  in  the  case  of  a  corporation  created  by 
special  law,  shall  thereupon  issue  a  certificate  of  incorporation  in  the  following 
form:  — 

[which  need  not  be  stated  here] 

The  secretary  shall  sign  the  certificate  of  incorporation  and  cause  the  great  seal 
of  the  commonwealth  to  be  thereto  affixed,  and  such  certificate  shall  have  the  force 
and  effect  of  a  special  charter.  The  existence  of  every  corporation  which  is  not 
created  by  special  law  shall  begin  upon  the  filing  of  the  articles  of  organization  in 
the  office  of  the  secretary  of  the  commonwealth.  The  secretary  of  the  common- 
wealth shall  also  cause  a  record  of  the  certificate  of  incorporation  to  be  made,  and 
such  certificate,  or  such  record,  or  a  certified  copy  thereof,  shall  be  conclusive  evi- 
dence of  the  existence  of  such  corporation. 

SECTION  17.  The  business  of  every  corporation  shall  be  managed  and  con- 
ducted by  a  president,  a  board  of  not  less  than  three  directors,  a  clerk,  a  treasurer 
and  such  other  officers  and  such  agents  as  the  corporation  by  its  by-laws  shall 
authorize. 


7-10  CORPORATIONS 

SECTION  18.  The  directors,  the  treasurer,  the  clerk  and  such  other  officers 
as  the  by-laws  may  prescribe  shall  be  elected  annually  by  and  from  the  board  of 
directors.  Every  director,  unless  the  by-laws  otherwise  provide,  shall  be  a  stock- 
holder. 

SECTION  19.  The  board  of  directors  may  exercise  all  of  the  powers  of  the  cor- 
poration, except  such  as  are  conferred  by  law,  or  by  the  by-laws  of  the  corporation, 
upon  the  stockholders.  A  corporation  may,  by  its  by-laws,  provide  for  an  execu- 
tive committee  to  be  elected  from  and  by  its  board  of  directors.  To  such  com- 
mittee may  be  delegated  the  management  of  the  current  and  ordinary  business  of 
the  corporation,  and  such  other  duties  as  the  by-laws  may  prescribe. 

SECTION  20.  There  shall  be  an  annual  meeting  of  the  stockholders  and  the 
time  and  place  of  holding  it,  and  the  manner  of  conducting  it,  shall  be  fixed  by  the 
by-laws. 

First  Meeting.  In  Massachusetts,  the  "  first  meeting  "  is  held  pre- 
vious to  filing  the  articles  of  incorporation,  in  Connecticut  after  such  filing. 
The  detail  of  procedure  also  is  different.  In  other  States,  the  procedure, 
while  similar  to  one  or  the  other  examples  shown  above,  will  nevertheless 
differ  enough  so  that  a  critical  examination  of  the  statutes  is  necessary  for 
any  State  in  which  incorporation  is  to  be  effected. 

The  minutes  of  the  "  first  meeting  "  and  the  records  of  all  later  meet- 
ings of  the  corporation  whether  regular  or  special  should  show  all  formal 
and  necessary  acts,  and  in  a  form  which  will  be  legally  conclusive. 

Advance  Preparation  for  Meeting.  It  is  desirable  that  all  the  busi- 
ness necessary  to  the  first  meeting,  or  any  formal  meetings  necessary  to 
incorporation,  shall  be  prepared  in  advance,  including  the  making  of  all 
motions  that  are  essential.  Not  only  is  time  thus  saved  but  greater  cer- 
tainty of  action  is  secured.  The  lawyer,  if  any,  who  is  attending  to  other 
details  should  attend  and  direct  the  meeting. 

It  has  been  held  in  some  States  that  one  of  the  incorporators  may  not 
act  as  notary  and  take  the  acknowledgment  of  the  others.  In  other 
States  this  has  been  done  without  objection  from  the  State  officials. 

Ordinarily  printed  blanks  can  be  had  which  much  facilitate  the  fram- 
ing of  the  formal  documents. 

By-Laws.  The  preparation  of  the  by-laws  is  of  great  importance, 
and  a  book  of  forms  and  the  by-laws  of  similar  corporations  will  be  of  great 
value,  but  should  be  supplemented  by  careful  and  thoughtful  considera- 
tion as  to  the  requirements  of  the  corporation  to  be  formed. 

Form  of  Charter.  In  some  States  a  formal  charter  is  issued  under  the 
great  seal  of  the  State;  in  others  the  articles  of  incorporation  are  pre- 
sented, certified,  and  filed,  and  constitute  the  charter;  a  duly  certified 
copy  is  then  evidence  of  the  existence  of  the  corporation. 

Objects.  The  objects  of  the  corporation  must  be  set  forth  in  the  arti- 
cles of  incorporation.  In  some  cases  it  is  required,  and  in  general  it  is 


CORPORATIONS  7-11 

desirable,  to  specify  the  statute  under  which  organization  is  sought. 
Sometimes  there  is  a  choice  as  to  the  statute  under  which  organization 
shall  be  effected,  and  careful  deliberation  may  sometimes  be  well  worth 
while.  The  objects  stated  should  be  sufficiently  comprehensive  so  that 
some  later  desired  action  on  the  part  of  the  corporation  will  not  be  found 
to  lie  outside  the  scope  of  corporate  powers  as  defined  by  the  objects 
specified. 

Two  Policies  as  to  Objects.  There  are  two  policies  practiced  in  set- 
ting forth  the  objects.  One  is  to  state  them  in  very  general  but  compre- 
hensive terms ;  implied  powers  are  then  added  by  law.  Another  is  to  be 
very  specific ;  the  danger  in  this  is  that  the  specifying  of  a  large  number 
of  objects  may  have  the  effect  of  precluding  any  not  specified.  When 
general  terms  are  used,  a  clause  like  the  following  is  sometimes  added : 

In  furtherance  of,  and  not  in  limitation  of,  the  objects  and  purposes  herein- 
above  stated,  and  the  general  powers  conferred  by  law,  it  is  hereby  expressly  pro- 
vided that  this  corporation  shall  have  the  following  powers;  that  is  to  say: 

Powers.  The  powers  of  the  corporation  rest  not  only  upon  the  arti- 
cles of  incorporation,  but  upon  such  parts  of  the  State  Constitution  and 
such  parts  of  the  statutes  as  are  applicable  both  as  to  extent  and  limita- 
tions, together  with  such  powers  as  the  Common  Law  adds  as  implied  and 
necessary. 

The  powers  are  then :  1.  Those  expressly  given.  2.  Impliedly  as 
incidental  to  express  powers.  3.  Impliedly  as  necessary  to  corporate 
existence. 

Implied  Powers.  The  implied  powers  added  by  law  are  not  merely 
those  necessary  and  indispensable,  but  also  those  appropriate,  convenient, 
and  suitable  for  the  purposes  set  forth.  The  corporation  has  thus  powers 
to  contract,  grant,  receive,  sue  and  be  sued ;  to  purchase,  hold,  lease,  or 
sell  lands ;  to  have  a  seal ;  to  make  by-laws  and  amend  them ;  to  borrow 
money;  to  execute  a  bond  or  a  note,  also  to  compromise  claims,  and 
submit  disputes  to  arbitration ;  to  endorse  for  another  for  accommodation ; 
to  draw,  endorse,  or  accept  bills  of  exchange ;  to  make  by-laws ;  to  main- 
tain continuous  succession  during  its  period  of  existence ;  as  well  as  other 
powers  not  mentioned  here.  There  is  a  presumption  that  contracts  of  a 
corporation  are  within  its  powers;  if  this  is  questioned,  the  burden  of 
proof  is  on  him  who  objects. 

Powers  from  Statute.  The  statute  often  specifies  many  powers  which 
the  Common  Law  had  already  recognized ;  but  the  statute  often  confers 
others  which  the  corporation  would  not  have  unless  expressly  granted. 
The  following  powers  of  business  corporations  are  definitely  specified  in 
the  statutes  of  Massachusetts : 


7-12  CORPORATIONS 

Every  corporation  which  is  subject  to  the  provisions  of  this  act  shall  have  the 
following  powers  and  privileges  and  shall  be  subject  to  the  following  liabilities: 

(a)  To  have  perpetual  succession  in  its  corporate  name,  unless  a  period  for  its 
duration  is  limited  by  special  law. 

(6)  To  sue  or  be  sued  in  its  corporate  name,  and  to  prosecute  or  defend  to  final 
judgment  and  execution  or  decree  in  any  court  of  law  or  equity. 

(c)  To  have  a  capital  stock  to  such  an  amount  as  may  be  fixed  in  its  agreement 
of  association  or  articles  of  organization  or  of  amendment  as  hereinafter  provided. 

(d)  To  have  a  corporate  seal,  which  it  may  alter  at  pleasure. 

(e)  To  elect  all  necessary  officers,  fix  their  compensation  and  define  their  duties. 

(/)  To  hold,  purchase,  convey,  mortgage  or  lease  within  or  without  this  com- 
monwealth such  real  or  personal  property  as  the  purposes  of  the  corporation  may 
require. 

(g)  To  make  contracts,  incur  liabilities  and  borrow  money  on  its  credit  and  for 
its  use. 

(h)  To  make  by-laws  not  inconsistent  with  the  laws  of  this  commonwealth  for 
regulating  its  government  and  for  the  administration  of  its  affairs  as  hereinafter 
provided. 

(t)  To  be  dissolved  or  to  have  its  affairs  wound  up  in  the  manner  hereinafter 
provided. 

Where  to  Incorporate.  In  what  State  shall  the  corporation  be  organ- 
ized? With  the  ordinary  mercantile  corporation,  the  answer  is  to  organ- 
ize as  a  domestic  corporation  in  the  State  where  the  business  headquarters 
are  and  where  most  of  the  business  is  to  be  transacted.  A  corporation 
doing  business  in  a  State  other  than  that  in  which  it  is  incorporated,  is 
called  a  foreign  corporation,  and  the  laws  in  one  way  or  another  are  likely 
to  be  less  favorable  to  a  foreign  corporation.  A  State  may,  although  it 
seldom  does,  pass  laws  to  shut  out  a  foreign  corporation  altogether,  or  by 
drastic  laws  reach  the  same  result  by  indirection. 

Conditions  Influencing  Place.  With  railroad  companies  or  with  large 
corporations  of  various  sorts  doing  much  business  in  several  States,  the 
case  is  less  simple.  The  fees  for  organization  and  for  taxation  are  not 
alike  in  all  States;  other  conditions  of  organization  or  of  operation  are 
more  burdensome  in  some  States  than  in  others.  On  the  other  hand,  the 
conservatism  of  the  laws  of  certain  States  tends  to  give  a  high  standing  to 
a  corporation  organized  therein,  which  has  some  effect  towards  making  the 
financing  easier.  In  the  case  of  long  lines  of  railroads,  separate  corpora- 
tions are  often  organized  in  different  States,  and  operated  under  a  single 
management.  For  the  larger  matters  of  organization,  the  services  of  a 
lawyer  are  desirable  or  necessary,  and  in  most  cases  are  readily  available. 

Charter  a  Contract.  The  charter  is  recognized  as  a  contract  between 
the  State  and  the  corporation.  A  general  statute  may  be  considered  an 
invitation ;  an  offer  is  made  when  the  articles  of  incorporation  are  filed, 
and  when  these  are  accepted  by  the  proper  State  official  in  accordance 


CORPORATIONS  7-13 

with  the  statute,  there  is  a  complete  contract;  neither  the  corporation 
nor  the  State  may  violate  it,  since  the  Constitution  of  the  United  States 
provides  that  "  no  State  shall  pass  any  law  impairing  the  obligations  of 
contracts." 

Amendment  of  Charter.  In  older  charters  there  are  sometimes  found 
provisions  which  later  seem  unsatisfactory  to  the  State,  but  amendment 
would  constitute  an  impairment  of  the  contract.  A  remedy  is  some- 
times found  in  such  cases  when  a  corporation  asks  for  further  legislation 
in  its  behalf;  the  State  is  then  in  position  to  "  trade,"  and  exact  some 
desirable  amendment  as  the  price  of  the  new  legislation.  Statutes  or 
special  charters  nowadays  commonly  contain  a  provision  reserving  to  the 
State  the  right  to  amend. 

Securities;  Bonds  and  Stock.  A  corporation  has  an  inherent,  an 
implied  power  to  contract  debts.  This  carries  with  it  the  power  to  give 
security  and  in  this  way  to  issue  bonds.  When  a  man  builds  a  house  he 
often  pays  for  it  only  in  part  in  cash  and  gives  a  mortgage  for  a  part; 
sometimes  he  pays  in  cash  all  he  can  raise  and  gives  a  mortgage  for  the 
balance;  sometimes  he  borrows  all  he  can  and  pays  cash  only  for  the 
balance.  A  corporation  is  similarly  financed,  oftentimes  in  part  from  the 
sale  of  bonds,  and  in  part  from  the  money  paid  in  to  the  capital  stock  of 
the  corporation  by  the  subscribers  who  thus  become  stockholders,  or  else 
paid  by  later  stockholders  who  become  such  by  purchasing  treasury  stock 
directly  from  the  corporation. 

Bonds.  The  bonds  are  frequently,  but  not  always,  mortgage  bonds. 
The  ordinary  mercantile  corporations  seldom  issue  bonds,  and  some  of 
the  early  railroads  issued  no  bonds  for  many  years.  Manufacturing  and 
railroad  corporations,  and  the  so  called  trusts,  some  of  them  mercantile, 
find  it  convenient  to  issue  bonds.  Whether  to  provide  the  money  needed 
mostly  from  the  sale  of  bonds  or  by  subscription  or  sale  of  stock  is  a  finan- 
cial rather  than  a  legal  question. 

Bondholders'  Interest.  Bonds,  which  constitute  a  first  claim  on  the 
property  of  a  corporation,  give  better  security  than  stock,  and  can  be  sold 
to  advantage  while  paying  a  low  rate  of  interest.  With  good  earnings 
the  stockholders  may  thus  receive  a  larger  percentage  of  profit  on  the 
smaller  amount  of  stock  required.  On  the  other  hand,  if  the  earnings  are 
unsatisfactory,  the  interest  on  the  bonds,  as  it  becomes  due,  must  neces- 
sarily be  paid,  and  a  failure  to  pay  interest  usually  means  a  receivership 
and  perhaps  foreclosure  of  the  mortgage,  which  may  result  in  a  total  loss 
to  the  stockholders;  whereas  if  there  were  no  bonds,  meagre  earnings 
would  result  only  in  a  loss  of  dividends  on  the  stock,  which  need  not  be 
paid  if  unearned,  and  would  not  imperil  the  property  so  long  as  the  earn- 
ings covered  expenses  of  operation.  It  is  a  matter  of  good  financial  judg- 


7-14  CORPORATIONS 

ment  to  determine,  in  each  case,  what  proportion  of  bonds  and  stock  to 
issue. 

Special  Information  Required  for  Incorporation.  In  the  case  of  rail- 
roads and  many  other  corporations,  it  is  sometimes  provided  by  law  that 
the  articles  of  incorporation  shall  state :  (a)  the  total  amount  of  its  capital 
stock ;  (6)  the  par  value  of  a  share ;  (c)  the  amount  of  stock  subscribed 
and  by  whom ;  (d)  the  amount  actually  paid  in ;  and,  sometimes  also, 
(e)  if  more  than  one  class  of  stock  (common  stock),  the  name,  quality, 
and  privileges  of  any  additional  classes  of  stock.  In  this  matter,  also, 
the  specific  requirements  of  the  statute  must  be  followed ;  these  differ  in 
different  States,  as  well  as  for  different  kinds  of  corporations  in  the  same 
State. 

Amount  of  Capital  Stock.  In  some  States  there  are  also  requirements 
as  to :  (a)  the  amount  of  capital  stock  already  paid  in  at  the  time  of  the 
"  first  meeting  "  ;  (6)  the  percentage  of  the  capital  stock  already  subscribed ; 
(c)  the  percentage  of  the  capital  stock  already  paid  in ;  or  (d)  the  percent- 
age of  the  capital  stock  already  subscribed  which  has  been  paid  in.  Some- 
times such  a  requirement  must  be  fulfilled  before  the  incorporation  is 
effected.  In  other  cases,  it  must  be  fulfilled  before  starting  business. 

Stock :  How  Acquired.  Stock  may  be  acquired  in  several  ways ;  by 
subscription  at  the  start,  by  later  purchase  from  the  corporation,  or  by 
transfer  from  some  other  stockholder.  Although  transfer  of  stock  is 
allowable,  certificates  of  stock  are  held  not  to  be  properly  "  negotiable 
instruments."  A  stock  certificate  is  a  written  acknowledgment  of  the 
interest  of  the  stockholder,  and  a  transfer  of  stock  must  be  registered  on 
the  books  of  the  company. 

Subscriptions:  Privileges  and  Responsibilities.  The  subscriber, 
before  incorporation,  not  only  secures  some  privileges,  but  he  also  incurs 
legal  responsibilities.  In  general,  a  subscriber  must  pay  his  subscription. 
In  some  States  the  subscription  stands  as  an  offer  which  may  be  withdrawn 
before  the  charter  is  secured,  but  which  is  accepted  and  becomes  a  contract 
the  moment  the  charter  is  secured ;  in  other  States  the  subscription,  once 
made,  cannot  be  withdrawn  unless  for  fraud  or  similar  adequate  cause. 
Sometimes  subscriptions  are  conditional,  but  commonly  not ;  sometimes, 
or  in  some  States,  there  is  an  implied  condition  that  all  the  shares  shall  be 
subscribed  for  unless  otherwise  specified ;  but  a  subscriber  may  waive  this 
if  he  sees  fit.  No  general  rule  of  universal  application  can  be  laid  down 
here  as  to  the  responsibility  of  the  subscriber. 

Subscription  Agreements.  In  some  States  a  formal  subscription  agree- 
ment is  necessary.  Whether  necessary  or  not,  an  agreement  "  in  con- 
sideration of  the  subscription  of  others  hereto,  I  promise  "  forms  a  con- 
tract which  probably  would  be  enforced. 


CORPORATIONS  7-15 

The  contract  of  the  subscriber  is  with  the  corporation  and  not  with 
the  other  subscribers ;  it  must  be  enforced  through  the  corporation,  and 
it  has  been  held  that  the  subscriptions  are  valid  commonly  not  only  by 
virtue  of  the  statute,  but  also  as  a  matter  of  Common  Law. 

Full  Paid  Stock.  In  some  States  it  is  unlawful  to  issue  stock  to  stock- 
holders except  on  payment  of  its  par  value.  In  other  States  corporations 
of  certain  classes  may  issue  stock  on  payment  of  less  than  par  value  under 
some  circumstances.  When  par  value  has  been  paid,  the  stock  is  non- 
assessable. National  Banks  are  a  notable  exception  to  this  rule ;  holders 
of  full  paid  stock  of  National  Banks  are  liable  to  an  additional  assessment 
equal  to  the  par  value  if  this  be  required  to  pay  depositors  or  other  credi- 
tors. In  some  States  a  similar  rule  prevails  as  to  all  corporations. 

Additional  Assessment.  Where  stock  has  not  been  paid  in  full,  the 
stockholder,  in  most  States,  may  be  called  upon  for  additional  assessments 
up  to  a  point  where  his  total  payments  shall  equal  the  par  value  of  the 
stock.  His  liability  is  primarily  to  the  corporation,  although  eventually 
to  creditors  in  case  the  assets  should  be  insufficient ;  but  in  many  States 
this  is  true  only  in  case  of  insolvency  or  its  substantial  equivalent.  The 
liability  of  stockholders  has  been  held  sometimes  to  be  jointly  and  severally, 
sometimes  proportionally. 

Where  a  corporation  is  clearly  solvent  and  in  successful  operation, 
stocks  not  fully  paid  for  will  not  be  assessed  because  there  is  no  occasion 
for  such  action.  The  statutes  relating  to  corporations  have  been  changed 
frequently  and  vary  so  much  in  different  States  that  a  careful  reading  of 
statutes,  as  well  as  an  examination  of  decisions,  is  necessary  to  ascertain 
what  are  the  liabilities  of  stockholders. 

Special  Liabilities  of  Stockholders.  In  some  States  the  stockholder  is 
liable  beyond  the  full  paid  stock  for  the  wages  of  employees  of  the  corpora- 
tion. He  is  also  liable  for  any  refund  which  has  impaired  the  security  of 
creditors.  In  some  cases  there  has  been  a  limitation  on  the  period  for  en- 
forcing the  liability  of  stockholders.  In  the  case  of  transfer  of  stock,  the 
rule  as  to  the  liability  of  transferor  and  transferee  is  variable.  In  Cali- 
fornia, stockholders  are  liable  for  all  debts  of  a  corporation. 

Stock  Issued  other  than  for  Cash.  While  stock  is  commonly  issued  for 
cash,  the  law  countenances  its  issue  for  labor  or  other  services  or  for  property 
if  its  purchase  would  not  be  "  ultra  vires"  a  term  to  be  explained  later.  In 
some  cases  practically  the  only  way  in  which  a  railroad  can  be  constructed 
is  by  paying  the  contractor  in  the  securities  of  the  corporation.  The 
measure  of  value  of  services  or  property  must  be,  in  general,  the  equivalent 
of  reasonable  value,  or  just  valuation,  but  in  a  very  few  States  an  agreed 
value,  or  an  arbitrary  value  fixed,  is  held  to  be  legal ;  and  in  the  absence 
of  fraud,  the  judgment  of  the  board  of  directors  as  to  value  is  con- 


7-16  CORPORATIONS 

elusive.  Stock  thus  issued  other  than  for  cash  has  been  held  to  be  non- 
assessable. 

Stock  as  Bonus.  In  some  States,  in  payment  of  a  debt  when  the 
credit  of  the  company  is  poor,  payment  may  be  made  in  bonds  with  a 
bonus  of  common  stock,  provided  the  market  value  of  bonds  and  stock 
be  not  less  than  the  par  value  of  the  bonds.  It  is  not  uncommon,  too,  to 
finance  corporations  by  issuing  a  block  something  as  follows :  bond,  $1000 ; 
8  shares  preferred  stock ;  4  shares  common  stock ;  the  selling  price  for  the 
block  being  perhaps  $1100. 

Preferred  Stock.  Preferred  stock  is  sometimes  issued  in  addition  to 
common  stock ;  the  word  "  preferred  "  means  little  or  nothing  unless  the 
preference  is  explained.  Ordinarily  such  stock  is  specified  to  be  preferred, 
or  to  have  priority,  both  as  to  assets  and  dividends;  the  provision  then 
is  that  the  preferred  stock  shall  have  first  claim  on  assets  in  case  of  liqui- 
dation, and  shall  receive  its  full  specified  dividend  before  any  dividend  is 
paid  on  the  common  stock.  Preferred  stock  usually  has  a  specified  rate 
of  dividend ;  if  "  cumulative  "  preferred  stock,  then  in  case  a  dividend  is 
omitted  in  any  year,  it  shall  be  paid  later  whenever  money  is  earned  in 
excess  of  fixed  charges  and  current  preferred  requirements,  and  before  any 
dividends  can  be  paid  on  the  common  stock.  Unless  the  quality  of  prefer- 
ence is  in  some  way  explained  or  specified,  the  use  of  the  word  appears  to 
have  no  effect. 

Unless  the  statutes  authorize  the  issue  of  preferred  stock,  its  legality 
is  doubtful.  When  the  statutes  authorize  it,  it  is  not  altogether  clear 
whether  the  corporation  has  a  right  to  issue  it  after  the  common  stock  is 
subscribed,  but  the  weight  of  authority  favors  its  legality.  It  is  often 
issued  when  reorganization  of  a  railroad  becomes  necessary,  sometimes  in 
place  of  bonds  upon  which  it  was  found  difficult  or  impossible  to  pay 
interest,  and  which  were  retired  in  favor  of  preferred  stock. 

Stock  of  Other  Corporations.  Although  at  Common  Law  a  corporation 
could  not  in  general  hold  stock  in  other  corporations,  yet  in  most  States 
this  is  now  authorized.  This  seems  almost  necessary  in  the  case  of  insur- 
ance companies  with  much  money  to  invest,  and  also  in  the  case  of  trust 
companies  for  the  investment  of  trust  funds.  At  present  it  is  not  un- 
common for  "  holding  companies  "  to  own  the  stocks  of  several  companies 
operating  in  a  single  line  of  corporate  work,  and  this  seems  not  unlawful 
now  unless  it  is  a  combination  in  restraint  of  trade,  which  is  unlawful  not 
only  under  the  Common  Law,  but  often  directly  under  Statute  Law  also. 

The  federal  anti-trust  law,  the  so-called  Sherman  Anti-Trust  Law,  not 
only  defines  the  offence,  but  also  attaches  a  penalty  which  includes  possible 
imprisonment.  This  law  is  not  on  its  face  directed  at  corporations,  but 
most  action  under  it  is  likely  to  be  against  large  corporations,  and  its  terms 


CORPORATIONS  7-17 

should  be  understood  by  anyone  forming  a  corporation  which  has  at  all 
the  character  of  a  combination  or  trust. 

Sherman  Law.  The  federal  anti-trust  law,  the  Sherman  Law,  is  directed 
against  any  combinations  or  operations  in  restraint  of  trade.  It  affirms  the 
Common  Law  principle  as  to  restraint  of  trade,  causes  it  to  apply  to  inter- 
state transactions,  thus  curing  difficulties  arising  from  the  inability  of  a 
State  to  exercise  sufficient  jurisdiction  and  control  of  many  cases.  In  ad- 
dition to  denning  the  offence,  the  act  also  imposes  a  penalty  of  fine  or  im- 
prisonment or  both.  It  also  provides  for  an  action  in  Equity  to  enjoin  opera- 
tions declared  illegal  by  this  act.  It  took  some  time  for  the  Supreme  Court 
of  the  United  States  to  determine  the  true  meaning  and  application  to  the 
act,  but  this  was  finally  accomplished  under  what  has  been  denominated 
"  the  light  of  reason."  The  dissolution  of  the  Standard  Oil  Trust  and  the 
Tobacco  Trust  were  accomplished  under  this  act.  With  the  fixing  of  this 
meaning  and  application  it  is  expected  that  it  will  be  possible  to  enforce 
the  penalty  of  imprisonment,  which  had  seemed  not  to  be  possible  while 
the  meaning  remained  somewhat  vague.  The  certainty  which  the  law 
aims  to  secure  is  temporarily  disturbed  with  relation  to  this  act  by  the 
later  legislation  known  as  the  Clayton  Act  and  The  Federal  Trade  Com- 
mission Law  enacted  late  in  1914 ;  new  Statute  Law  of  this  sort  is  likely 
to  bring  about  new  rulings  and  definitions  of  the  law  from  the  Supreme 
Court,  as  the  laws  overlap. 

Clayton  Act.  The  Clayton  Act  is  specifically  an  anti-trust  act.  It  pro- 
hibits discrimination  in  price  between  individuals  "  where  the  effect  of  such 
discrimination  may  be  to  substantially  lessen  competition  or  tend  to  create 
a  monopoly."  It  further  prohibits  making  contracts  which  specify  that 
the  purchaser  shall  not  use  or  deal  in  the  goods  of  a  competitor  if  the  effect 
is  to  lessen  competition.  The  act  further  provides,  in  the  case  of  banks 
and  certain  other  corporations,  that  any  individual  shall  not  hold  posi- 
tions of  director  or  important  officer  in  more  than  one  such  corporation, 
where  both  corporations  are  naturally  competitors ;  this  is  known  as  the 
"  interlocking  directorate  "  provision. 

Federal  Trade  Commission.  The  Federal  Trade  Commission  is  a 
body  appointed  under  United  States  laws  to  investigate  and  remedy  in- 
fractions of  the  laws  as  well  as  any  acts  suppressing  competition.  Provision 
is  made  so  that  it  may  act  less  formally  than  a  court  of  law  in  such 
investigations. 

A  careful  reading  of  all  these  acts  and  of  the  decisions  rendered  will  be 
necessary  for  a  proper  understanding  of  the  laws,  and  there  may  then  re- 
main some  uncertainty  as  to  their  scope  and  application  until  there  has 
been  time  for  Supreme  Court  decisions  to  bring  about  the  stability  which 
business  needs  and  which  the  law  seeks  to  secure. 


7-18  CORPORATIONS 

Another  federal  law,  the  Interstate  Commerce  Act,  deals  not  only  with 
railroad  rates  but  also  with  safety  appliances  for  railroads,  thus  giving  a 
new  expression  of  federal  powers ;  the  same  is  true  of  the  federal  Work- 
men's Compensation  Act,  which  however  is  not  confined  in  its  action  to 
corporations,  although  in  practice  few  personal  employers  are  interested. 

Amount  of  Capital  Stock.  As  to  the  amount  of  capital  stock,  it  should 
be  understood  that  the  value  of  property  is  mainly  determined  by  its  earn- 
ings. With  corporations  having  public  service  qualities,  a  high  rate  of 
dividend  return,  if  the  capital  stock  is  small,  will  tend  to  cause  dissatis- 
faction on  the  part  of  the  public,  and  perhaps  bring  about  adverse  legisla- 
tion ;  over-capitalization  on  the  other  hand  results  in  higher  taxes  under 
the  laws  of  many  States.  It  is  not  altogether  uncommon  with  corporations 
for  preferred  stock  to  be  issued  to  the  amount  of  the  physical  value  of  the 
property,  and  common  stock  to  capitalize  the  additional  or  surplus  earn- 
ings, representing  the  value  of  the  franchise  or  good-will  of  the  company ; 
such  stock  is  sometimes  called  watered  stock. 

Capital;  Capital  Stock;  Capitalization.  In  considering  the  financial 
side  of  the  corporation  it  may  be  proper  to  distinguish  between  :  (a)  capital, 
the  property  value  of  the  corporation,  its  assets,  or  the  fund  with  which 
it  does  business ;  (6)  capital  stock,  the  amount  of  stock  authorized ;  (c)  capi- 
talization, which  includes  bonds  as  well  as  stock. 

Promoters.  In  the  formation  of  a  corporation,  an  important  person 
sometimes  is  the  "  promoter,"  whose  function  it  is  to  effect  the  incorpora- 
tion and  organization  of  a  company ;  who  brings  together  the  persons  who 
become  interested  in  the  enterprise ;  who  aids  in  procuring  subscriptions 
and  sets  in  motion  the  machinery  which  leads  to  the  formation  of  the  com- 
pany itself.  His  position  differs  much  from  that  of  the  subscriber. 

While  a  contract  comes  into  force  between  subscribers  and  corpora- 
tion the  moment  the  charter  is  secured,  on  the  basis  of  a  continuing  offer 
then  accepted,  it  is  held  in  most  States  that  there  is  no  such  contract 
between  a  promoter  and  the  corporation.  The  promoter's  services  were 
performed  before  there  was  any  corporation  to  make  either  an  express  or 
an  implied  contract  to  pay  the  expenses  of  promotion. 

Payment  to  Promoters.  If  the  promoter  expects  payment  for  his 
services,  he  should  have  a  contract  with  the  subscribers  or  with  some  in- 
dividual or  individuals,  with  proper  assurance  that  enough  money  is  avail- 
able. The  agreement  should  be  in  writing ;  for,  if  the  subscriber  he  dealt 
with  should  die,  the  other  subscribers  might  be  inclined  to  dodge  respon- 
sibility if  opportunity  offered.  While  a  promoter  has  no  claim  that  he 
can  enforce  against  the  corporation,  on  the  other  hand  there  appears  to 
be  no  legal  obstacle  to  the  payment  by  the  corporation,  at  its  pleasure,  of 
expenses  connected  with  organization,  and  these  may  properly  include 


CORPORATIONS  7-19 

any  allowances  for  promotion.  It  is  not  improbable  that  mining  engineers 
may  have  the  opportunity  or  find  it  necessary  to  act  as  promoters.  If  the 
work  of  the  promoter  is  properly  conducted  there  is  no  reason  why  stigma 
should  attach. 

Secret  Profits  of  Promoters.  It  is  held  that  promoters  stand  in  a  fidu- 
ciary relation  which  prevents  them  from  receiving  any  secret  profits.  A 
promoter,  therefore,  cannot  purchase  property  in  the  interests  of  a  cor- 
poration and  sell  at  an  advance,  at  least  unless  all  others  interested  are 
notified  and  assent ;  neither  can  he  receive  a  bonus  from  the  seller  of  the 
property.  Sometimes,  however,  the  property  is  his  own,  and  was  his 
own  before  he  undertook  the  promotion ;  his  position  then  is  not  equivocal 
and  he  may  properly  bargain  and  agree  with  the  corporation  for  its  pur- 
chase. It  is  probable  that  in  many  cases  of  promotion  some  abuse  creeps 
in.  The  promoter  in  any  important  transactions  ought  to  have  the  advice 
of  a  good  lawyer  to  make  sure  that  his  dealings  with  the  subscribers  and 
corporation  are  clearly  legal  in  form  as  well  as  in  substance.  This  is 
especially  important  if  he  desires  not  only  to  sell  property,  but  also  to 
retain  a  large  and  perhaps  controlling  interest  in  the  company,  as  often 
happens. 

Stock  in  Hands  of  Trustees.  In  some  cases,  an  inventor  with  little 
funds,  or  a  miner,  financially  weak,  desires  to  form  a  company  to  finance 
his  enterprise,  where  neither  he  nor  the  capitalists  interested  may  be  will- 
ing that  the  other  party  shall  exercise  a  controlling  interest.  In  such  case, 
the  parties  may  agree  to  place  the  stock  in  the  hands  of  trustees  in  whom 
both  interests  have  confidence. 

Board  of  Directors.  While  the  stockholders  constitute  the  corpora- 
tion, most  of  the  powers  must  be  exercised  through  the  board  of  direc- 
tors ;  this  may  be  provided  in  the  by-laws,  although  in  some  States  it  is 
specified  in  the  statute  which  constitutes  a  part  of  the  charter.  Some- 
times the  "  president  and  board  of  directors  "  are  specified.  While  the 
directors  have  power  to  incur  debts,  and  thus  to  issue  bonds,  in  some  by- 
laws it  is  provided  that  the  issuance  of  bonds  or  the  sale  of  real  property 
shall  require  the  vote  of  the  stockholders ;  in  some  States  the  statute  re- 
quires this.  The  by-laws  may  provide  for  other  general  officers,  and  may 
also  specify  their  duties ;  unless  so  specified,  it  will  be  implied  that  they 
exercise  the  powers  customary  to  such  officers. 

Functions  of  Stockholders.  In  the  absence  of  any  special  require- 
ments, the  functions  of  the  stockholders  may  be  restricted  to  the  election 
of  a  board  of  directors  and  the  passing  of  by-laws ;  ordinarily  they  are  not 
so  closely  confined.  Unless  otherwise  provided,  the  power  to  increase  or 
decrease  capital  stock  rests  with  the  stockholders  rather  than  with  the 
board  of  directors,  but  there  must  be  some  statute  authorizing  such  change ; 


7-20  CORPORATIONS 

the  same  is  true  of  any  change  in  the  articles  of  incorporation.  Unless 
the  by-laws  provide  otherwise,  the  power  to  amend  by-laws  also  rests  with 
the  stockholders.  Nor  are  the  rights  of  a  stockholder  confined  to  action 
in  the  meetings;  he  has  a  right  to  inspect  the  books  and  papers  of  the 
corporation  either  personally  or  by  agent;  but  it  must  be  for  a  proper 
purpose  and  at  a  proper  time.  While  a  majority  vote  of  the  stockholders 
controls  ordinarily,  yet  a  minority  may  sometimes  enjoin  or  restrain  either 
action  by  the  board  of  directors  or  by  a  majority  of  stockholders,  if  such 
action  is  prejudicial  to  corporate  interests  or  the  rights  of  the  minority, 
which  a  court  of  Equity  tends  to  protect. 

Payment  of  Dividends.  The  stockholders  have  not  the  right  to  com- 
pel the  payment  of  a  dividend.  Such  payment  is  in  the  discretion  of  the 
board  of  directors,  and  even  when  earned,  need  not  be  made  unless  the 
board  thinks  best.  It  may  not  be  paid  from  capital ;  it  must  be  from  net 
profits  or  surplus.  It  may  be  in  money,  stock,  or  other  property.  Any 
act  or  failure  to  act,  as  to  dividends  or  otherwise,  which  indicates  bad 
faith  may,  however,  be  reached  by  a  proceeding  in  Equity. 

Stockholders'  Meetings.  Stockholders'  meetings  are  held  annually 
and  at  such  other  times  as  special  meetings  are  called.  The  notice  or  call 
for  the  meeting  generally  specifies  the  items  of  business  to  come  before  it. 
At  the  annual  meeting  the  election  of  directors  occurs,  and  this  is  usually 
followed  immediately  by  a  meeting  of  the  board  of  directors  who  at  once 
elect  a  president  and  such  other  officers  as  seem  necessary  or  wise. 

At  the  annual  meeting  the  stockholders  also  usually  ratify  the  acts  of 
the  directors  and  officers  during  the  year  past.  Voting  on  important 
matters  is  ordinarily  by  shares,  and  a  majority  of  the  shares  are  necessary 
to  constitute  a  quorum.  A  majority  of  votes  represented,  elect ;  in  some 
corporations  cumulative  voting  is  practiced ;  this  is  allowed  by  the  statutes 
of  some  States,  but  is  rather  unusual.  Under  this  system,  a  voter  may  be 
allowed  to  cast  six  ballots  for  one  director  rather  than  cast  one  ballot  for 
each  of  six  directors,  thus  enabling  a  minority  to  secure  some  representa- 
tion in  the  directorate,  if  the  minority  is  not  too  small.  As  a  rule,  few 
stockholders  are  actually  present  at  a  meeting;  when  absent,  a  stock- 
holder is  often  represented  by  a  "  proxy,"  a  sort  of  power  of  attorney  au- 
thorizing another  to  act  in  his  stead.  Voting  by  proxy  is  not  a  Common 
Law  right  or  privilege,  but  must  be  authorized  by  statute  or  by-law ;  as 
a  matter  of  modern  practice,  however,  most  of  the  votes  cast  at  any  stock- 
holders' meetings  are  by  "  proxy." 

Stockholders'  Meetings:  Where  Held.  Unless  otherwise  clearly  au- 
thorized by  statute,  stockholders'  meetings  must  be  held  in  the  State 
where  the  corporation  is  chartered ;  this  is  especially  necessary  in  the  case 
of  the  "  first  meeting  "  where  the  incorporation  is  effected.  Ordinarily 


CORPORATIONS  7-21 

there  is  no  requirement  that  meetings  of  the  directors  shall  be  held  within 
this  State;  but  it  is  considered  desirable  that  the  first  meeting  of  the 
directors  should  be  held  within  the  State,  probably  because  at  this  meet- 
ing the  organization  of  the  corporation  is  perfected. 

Business  in  Hands  of  Directors  and  Officers.  The  business  of  the 
corporation,  as  has  been  stated,  is  carried  on  by  the  board  of  directors,  or 
by  the  president  and  board  of  directors,  and  not  directly  by  the  stock- 
holders, although  by  by-law  or  statute  certain  proceedings  must  have 
previous  authorization  from  the  stockholders,  or  in  some  cases  ratifica- 
tion by  the  stockholders  at  one  of  their  meetings. 

Restricted  Powers  of  Corporations;  Ultra  Vires.  In  many  ways  the 
legal  status  of  the  corporation  is  substantially  that  of  an  individual ;  but 
while  an  individual  may  without  restriction  do  almost  any  legal  act,  a  cor- 
poration is  restricted  to  acts  within  the  scope  of  the  objects  or  purposes 
for  which  it  was  organized.  Other  things,  although  legal  in  themselves, 
it  may  not  do,  because  they  are  outside  the  scope  of  the  corporate  powers ; 
the  expression  ultra  vires  is  used  to  characterize  acts  outside  the  scope  of 
corporate  powers.  An  official  of  one  of  the  railroads  terminating  in  Boston 
subscribed  some  years  ago  to  a  fund  to  secure  the  success  of  the  Peace 
Jubilee,  but  at  the  action  of  a  stockholder,  he  was  restrained  from  paying 
the  subscription  out  of  the  funds  of  the  company.  The  corporation  was 
organized  to  carry  on  a  railroad,  and  running  a  band  concert  was  ultra 
vires.  No  doubt  the  Peace  Jubilee  brought  profit  to  the  railroad,  but  so 
also  did  almost  any  commercial  business  in  the  city. 

Rights  Under  Ultra  Vires  Contracts.  Not  only  may  a  stockholder 
enjoin  a  corporation  from  acting  ultra  vires,  but  in  the  case  of  certain 
actions,  the  State  may  sometimes  even  proceed  to  bring  about  forfeiture 
of  charter.  A  contract  fully  executed,  however,  will  seldom  be  set  aside 
as  ultra  vires;  the  railroad  company  for  instance  might  have  paid  the 
money  at  the  time  it  was  subscribed  for  the  Peace  Jubilee.  An  executory 
contract  ultra  vires  cannot  be  enforced  by  either  party,  but  where  some- 
thing has  been  done  and  either  party  has  received  benefits,  a  proceeding 
in  Equity  will  adjust  the  matter.  Similarly,  the  law  will  often  protect  a 
person  who  has  honestly  performed  his  part  of  a  contract  ultra  vires,  or 
one  who  has  entered  into  a  contract  not  clearly  ultra  vires  without  full 
knowledge  of  the  circumstances.  In  case  of  conveyances  by  or  to  the 
corporation  ultra  vires,  authorities  differ.  It  is  doubtful  if  even  unanimous 
action  by  shareholders  will  cure  an  ultra  vires  act ;  the  control  of  the  cor- 
poration is  in  the  State  and  limited  by  its  charter,  a  control  not  to  be  set 
aside  by  any  action  of  the  shareholders. 

Negotiable  Instruments  Ultra  Vires.  A  negotiable  instrument  issued 
ultra  vires  in  the  hand  of  an  innocent  party  is  clearly  good  under  the  laws 


7-22  CORPORATIONS 

governing  negotiable  instruments,  unless  the  instrument  in  its  nature  was 
without  the  scope  of  the  corporation's  power. 

Directors  as  Trustees.  The  board  of  directors  is  also  restricted  in  an- 
other way ;  while  the  directors  are  not  strictly  a  board  of  trustees,  their 
position  has  much  of  the  same  fiduciary  quality.  They  hold  a  position 
of  trust  for  the  stockholders,  not  for  a  majority  of  stockholders.  It  has 
sometimes  been  held  that  the  directors  as  a  board  cannot  contract  with 
one  of  their  members  as  an  individual.  The  prevailing  rule  is  not  as  strict 
as  that ;  but  any  such  transaction  must  be  clear  and  aboveboard  and,  in 
case  a  question  is  raised,  the  burden  of  proof  is  on  the  director  to  show  that 
the  contract  was  fair.  It  is  quite  clear  that  no  member  of  the  board  may 
derive  any  secret  profit  from  his  position;  any  such  secret  profit  can  be 
recovered  for  the  benefit  of  the  corporation.  Some  years  ago  the  presi- 
dent of  a  large  express  company  bought  for  himself  a  small  tributary  com- 
pany and  sold  it  to  the  larger  company  at  a  profit ;  it  was  held  to  be  an 
illegal  sale.  On  the  contrary  a  stockholder  may  contract  freely  with  the 
board,  and  is  not  restricted  in  voting  because  he  has  an  interest  in  the 
matter  voted;  nevertheless,  a  stockholder  with  a  controlling  interest, 
thus  with  power  to  elect  directors,  must  exercise  his  power  in  such  manner 
as  not  to  work  fraud  on  the  corporation. 

Liability  of  Directors.  While  the  directors  are  liable  for  any  abuse  of 
trust,  for  gross  negligence  and  the  like,  they  are  not  liable  for  errors  of 
judgment ;  they  are  required  to  exercise  ordinary  care,  skill,  and  pru- 
dence, and  to  act  with  honest  purpose. 

Nevertheless,  if  officers  act  in  excess  of  authority,  whether  ultra  vires 
or  beyond  the  authority  lodged  in  them  personally,  they  may  be  held 
liable  to  the  corporation,  and  also  to  those  with  whom  they  deal.  Few 
cases  occur,  however,  where  action  is  taken  against  an  official.  Directors, 
being  restricted  as  to  contracting  with  themselves,  are  not  entitled  to  pay- 
ment for  their  services  except  as  provided  in  the  by-laws  or  statute,  or  as 
voted  by  the  stockholders.  Ordinarily  there  is  some  such  provision,  so 
that  they  are  paid  for  attending  directors'  meetings. 

Executive  Committee.  The  by-laws  often  provide  for  an  executive 
committee  as  a  sub-committee  of  the  board,  with  important  powers,  and 
also  authorize  the  appointment  of  necessary  officers  and  agents  of  the  cor- 
poration. The  statute  sometimes  makes  such  provision,  although  the 
corporation  doubtless  in  the  absence  of  such  express  provision  has  inherent 
power  to  appoint  the  officers  and  agents  necessary  to  the  exercise  of  its 
functions.  It  has  already  been  stated  that  the  directors  act  as  a  board 
and  not  as  individuals.  If  action  is  taken  at  any  time  as  the  result  of 
personal  interviews  or  after  telephone  conversations,  such  action  ought  to 
be  taken  anew,  or  ratified,  at  the  next  meeting  of  the  board.  Action  taken 


CORPORATIONS  7—23 

after  conference  by  one  member  with  all  the  others,  whether  legal  or  not, 
is  bad  business  practice  and  often  results  in  action  which  would  not  be 
possible  in  an  open  meeting  of  the  board. 

Powers  of  State  over  Corporations.  While  the  charter  is  a  contract 
which  the  State  may  not  set  aside,  yet  the  State  may  exercise  certain 
powers,  not  expressed  in  the  charter,  over  corporations  as  well  as  over 
individuals.  For  example,  it  may  exercise  police  powers  for  the  protec- 
tion of  the  public  in  matters  of  health,  safety,  comfort,  morals,  or  property. 
As  a  matter  of  Common  Law,  it  is  contrary  to  public  policy  for  the  State 
to  relinquish  this  power.  It  may  thus  enforce  the  rights  of  the  public 
against  a  common  carrier,  to  be  described  in  a  later  chapter,  and  thus 
regulate  railroad  rates  unless  it  has  restricted  itself  in  the  charter,  and 
even  regulate  wages  paid  to  employees ;  it  may  also  prescribe  safety 
appliances  for  railroads  or  for  manufactories.  It  has  the  power  to  tax 
corporations  in  any  manner  not  in  violation  of  either  the  State  or  the 
United  States  Constitution.  If  the  charter  provides  for  some  special 
method  of  taxation,  the  corporation  having  accepted  the  charter  cannot 
afterwards  object.  The  State  has  the  power  to  tax  the  franchise  of  the 
corporation  for  the  right  or  privilege  of  doing  business. 

MUNICIPAL   CORPORATIONS 

Definition.  Municipal  corporations  are  mainly,  cities,  towns,  and 
counties.  They  are  political  units ;  they  are  physical  units  into  which  a 
State  is  geographically  divided ;  but  they  are  also  business  corporations, 
and  it  is  from  this  standpoint  that  they  are  of  interest  here. 

How  Organized.  Small  cities,  counties,  and  towns  may  be  organized 
and  may  act  under  general  statutes ;  but  large  cities  are  huge  business 
corporations  whose  administration  involves  the  most  difficult  problems 
connected  with  democratic  government ;  such  corporations  require  careful 
regulation  by  the  State,  and  their  needs  cannot  well  be  met  except  by  special 
charters  which  even  then  need  amendment  from  time  to  time  to  cure 
defects  as  they  become  evident. 

In  many  States  cities  are  created  by  special  charter,  while  in  others 
general  statutes  control;  sometimes  the  State  constitution  requires  the 
latter.  In  such  cases  it  is  common  to  classify  cities  according  to  popu- 
lation, with  a  code  of  laws  for  each  class.  In  Illinois,  cities  are  incor- 
porated under  general  statutes  in  this  way ;  but  as  there  are  no  other  cities 
in  the  same  class  as  Chicago,  the  statute  is  in  effect  a  special  charter  for 
that  city.  For  other  cities  in  the  State,  uniformity  of  treatment  secured 
under  general  laws  seems  to  have  advantages. 

City  a  Business  Corporation.  It  is  important  that  the  large  city 
should  be  recognized  to  be  a  great  business  corporation,  and  a  public  ser- 


7-24  CORPORATIONS 

vice  corporation.  Other  large  corporations,  railroad,  telephone,  lighting, 
insurance,  and  others,  have  long  been  under  State  regulation,  and  some 
commission  is  usually  appointed  to  observe  and  perhaps  control  their 
action  and  to  protect  the  interests  of  the  public.  The  State,  in  its  charter 
for  cities,  in  a  similar  way  not  only  grants  powers,  but  also  imposes  re- 
strictions for  the  purpose  of  insuring  honest  and  efficient  handling  of  the 
business  of  the  city. 

Acceptance  of  Charter.  The  municipal  corporation  serves  as  the  agent 
of  the  State  and  is  thus  a  convenient  means  to  properly  perform  its  func- 
tions with  its  citizens.  It  does  not  seem  necessary  that  the  citizens,  mem- 
bers of  the  local  corporation,  should  formally  accept  the  charter,  and 
frequently  this  is  not  required ;  the  charter  then  does  not  take  on  the 
character  of  a  contract,  and  its  repeal  is  at  any  time  possible.  It  is  quite 
common,  however,  for  a  statute  to  provide  that  a  new  or  an  amended  char- 
ter shall  have  the  approval  of  the  citizens  before  becoming  operative. 
This  is  ordinarily  accomplished  by  a  referendum  at  the  next  city  election. 

General  Powers.  The  powers  of  a  municipal  corporation  have  been 
well  stated  to  be : 

1.  Those  expressly  granted. 

2.  Those  necessarily  or  fairly  implied  or  incident  to  those  expressly 
granted. 

3.  Those  essential  to  the  declared  object  and  purposes,  and  not  simply 
convenient,  but  indispensable. 

The  powers  are  closely  confined  and  may  not  be  extended  by  by-laws 
or  municipal  ordinances. 

More  Specific  Powers.  It  thus  has  power  to  make  ordinary  con- 
tracts; to  incur  debts,  but  not  to  borrow  money  unless  specifically  au- 
thorized ;  to  own  property,  and  acquire  it  by  gift ;  to  indemnify  officers ; 
to  compromise  or  arbitrate ;  to  pay  money  when  not  legally  liable. 

It  has  police  powers  and  in  the  interest  of  the  public  welfare  it  may 
exercise  them  to  regulate  occupations  and  amusements,  health,  nuisances, 
licenses,  markets,  fires,  care  of  the  indigent  and  infirm,  as  well  as  other 
matters  not  here  specified.  Among  other  things,  it  may  regulate  the  run- 
ning of  trains.  Another  proper  function  is  the  regulation  of  the  liquor 
traffic.  To  municipal,  as  to  other  corporations,  the  State  may  and  does 
delegate  some  of  its  power,  as  the  power  to  take  lands  by  right  of  eminent 
domain,  which  is  granted  to  cities  and  towns,  as  well  as  to  railroads. 

Legislation  and  Judicial  Powers.  To  municipal  corporations  alone 
does  the  State  delegate  legislative  power  and  judicial  power.  They  thus 
have  legislative  power  to  pass  ordinances ;  but  these  must  conform  to  the 
charter  and  to  the  State  Constitution,  must  not  be  contrary  to  public 
policy  or  other  general  policy  of  the  State,  and  not  be  oppressive  or  un- 


CORPORATIONS  7—25 

reasonable.  As  to  the  judicial  powers  of  a  municipal  corporation,  its 
courts  have  some  Common  Law  power  as  well  as  jurisdiction  with  relation 
to  its  ordinances,  and  it  has  been  held  that  resident  citizenship  does  not 
disqualify  a  judge  from  sitting  in  municipal  cases. 

While  in  a  general  way  the  municipality  may  not  delegate  its  powers ; 
while  purely  ministerial  acts  may  be  done  under  its  authority  by  persons 
who  act  as  agents ;  yet  discretionary  powers  must  be  exercised  directly  by 
the  municipality  in  the  channels  authorized  by  charter. 

Direct  Exercise  of  State  Powers.  As  the  State  passes  laws  affecting 
its  citizens  so  as  to  afford  greater  security  to  life  and  property,  so  also  it 
provides  restrictions  and  checks  upon  the  action  of  municipal  corporations. 
From  this  standpoint  the  Commonwealth  of  Massachusetts  believes  that 
the  City  of  Boston  is  under  better  protection  if  the  Police  Commissioner 
is  appointed  by  the  State ;  and  the  commission  which  grants  liquor  licenses 
is  appointed  in  the  same  way.  In  Michigan  and  in  some  other  States  the 
practice  is  different,  for  there  the  constitutional  right  of  self-government  is 
strongly  asserted  and  certain  State  appointments  of  officers  to  serve  the 
city  of  Detroit  were  actually  set  aside  by  the  courts  as  illegal,  unconstitu- 
tional. In  most  States,  however,  the  Michigan  rule  does  not  prevail. 

Mayor;  Council;  Aldermen.  The  charter  specifies  the  governing  body 
of  the  municipality,  in  Boston  a  Mayor,  and  a  City  Council  now  a  single 
body,  although  formerly  there  were  a  Board  of  Aldermen  and  a  larger 
Common  Council ;  the  terms  of  office  are  specified,  as  well  as  the  powers 
granted  to  each.  Like  the  directors  of  a  business  corporation,  the  mem- 
bers of  the  Council  properly  occupy  a  fiduciary  position,  although  it  is 
sometimes  hard  to  believe  it.  In  addition  to  the  officials  specified  in  the 
charter,  there  are  others  provided  for  in  the  ordinances. 

Board  of  Public  Work.  An  important  department  in  that  city  of 
great  interest  to  engineers  is  the  Department  of  Public  Works,  under  a 
Commissioner  of  Public  Works,  "  who  shall  be  a  civil  engineer  of  recog- 
nized standing  in  his  profession  " ;  "  who  shall  construct  all  streets  and 
sewers,"  "  shall  have  full  charge  of  all  engineering  work  "  "  and  of  the 
laying  out  and  construction  of  all  public  improvements,"  with  some  speci- 
fied exceptions. 

Departments.  The  organization  in  other  cities  is  often  quite  different. 
Whether  under  a  Board  (or  Department)  of  Public  Works,  or  under  what- 
ever names,  there  are  in  every  city  various  departments  such  as  street, 
water,  wire,  health,  parks  and  public  grounds,  sewers  and  drains,  bridges 
and  ferries,  and  others. 

Building  Laws.  The  charter  of  Boston,  in  the  interest  of  safety,  pro- 
vides building  laws  which  must  be  consulted  by  engineers  designing  struc- 
tural details ;  and  these  laws  must  be  observed,  not  only  in  general  terms, 


7-26  CORPORATIONS 

but  also  with  reference  to  specifications  prescribing  allowable  stresses,  for 
example,  or  the  proportions  of  materials  to  be  used  in  concrete ;  it  provides 
for  a  Building  Commissioner  and  for  inspectors  under  him.  The  power  of 
the  city  to  issue  licenses  is  such  that  little  or  nothing  can  be  done  in  new 
building,  or  in  repairs,  or  in  opening  the  streets  for  water,  sewer,  or  gas 
connections,  or  for  any  purpose,  without  a  previous  permit  or  license ;  the 
practice  of  any  city  at  the  particular  time  must  be  known  if  the  engineer 
in  charge  of  building  construction  is  to  avoid  trouble.  The  requirements 
as  to  permits  or  licenses  are  prescribed  by  ordinance  in  some  cases,  but 
sometimes  are  department  regulations  only. 

Civil  Service  Provisions.  To  avoid  the  evils  of  political  patronage, 
civil  service  examinations  are  in  many  cases  required  by  charter  as  a 
qualification  for  appointment  to  many  classes  of  city  employment. 

Awarding  Contracts.  To  minimize  the  opportunity  for  favoritism  in 
awarding  contracts  for  public  work  the  following  provision  occurs  in  the 
charter  for  Boston : 

Officers  and  boards  shall,  in  their  respective  departments,  make  all  neces- 
sary contracts  for  the  employment  of  labor,  the  supply  of  materials  and  the  con- 
struction, alteration  and  repair  of  all  public  works  and  buildings. 

Every  officer  or  board  in  charge  of  a  department  in  said  city,  when  author- 
ized to  erect  a  new  building  or  to  make  structural  changes  therein,  shall  make  con- 
tracts therefor,  not  exceeding  five,  each  contract  to  be  subject  to  the  approval  of  the 
mayor;  and  when  about  to  do  any  work  or  to  make  any  purchase,  the  estimated 
cost  of  which  amounts  to  or  exceeds  two  thousand  dollars,  shall,  unless  the  mayor 
gives  a  written  authority  to  do  otherwise,  invite  proposals  therefor  by  advertise- 
ments. 

Every  proposal  for  doing  such  work  or  making  such  sale  shall  be  accompanied 
by  a  suitable  bond,  certified  check,  or  certificate  of  deposit,  for  the  faithful  perform- 
ance of  such  proposal. 

All  contracts  made  by  any  department  of  the  city  of  Boston  shall,  when  the 
amount  involved  is  two  thousand  dollars  or  more,  be  in  writing,  and  no  such 
contract  shall  be  deemed  to  have  been  made  or  executed  until  the  approval  of  the 
mayor  in  writing  is  affixed  thereto.  All  such  contracts  shall  be  accompanied  by  a 
suitable  bond  or  deposit  of  money  or  other  security  for  the  faithful  performance 
of  such  contracts. 

Most  large  cities  have  similar  provisions ;  these  are  sometimes  a  part 
of  the  charter,  sometimes  they  are  only  ordinances.  A  city  ordinance  of 
Boston  further  provides  that  no  head  of  a  department  shall  construct 
work  until  money  has  been  appropriated. 

Engineer  to  Know  Formalities.  Any  contractor  or  contractor's  en- 
gineer should  know  that  all  required  formalities  have  been  complied  with 
before  entering  upon  a  contract  for  public  work.  If  the  work  is  performed 
without  advertising  when  that  is  required,  any  citizen  may  bring  action 
and  prevent  the  city  paying  for  the  work  done.  In  this  case  the  city 


CORPORATIONS  7-27 

cannot  pay  either  at  contract  rates  or  on  quantum  meruit,  the  value  of  the 
service.  The  contract  is  void  because  illegal ;  there  cannot  be  an  implied 
contract,  because  even  the  express,  written  contract  is  void  because  illegal. 
The  law  was  passed  to  protect  the  taxpayer  and  the  courts  sustain  the 
law ;  the  contractor  has  ample  opportunity  to  protect  himself.  He  may 
claim  hardship  perhaps,  but  certainly  not  injustice ;  the  result  is  due  to  his 
own  negligence  in  not  knowing  whether  the  contract  was  legally  let.  With- 
out such  a  law  the  taxpayer  has  no  adequate  protection. 

Express  Legislative  Grants.  The  municipality  has  no  inherent  right 
(nor  one  implied  by  the  Common  Law)  to  purchase,  erect,  or  maintain 
water  works,  gas,  or  electric  plants.  This  must  come  by  express  legislative 
grant,  by  statute.  It  is  true  also  that,  ordinarily,  the  municipality  cannot 
exercise  its  powers  beyond  its  boundaries;  nevertheless  a  statute  some- 
times authorizes  the  municipality  to  build  water  work  or  construct  sewers 
beyond  its  limits ;  public  necessity  demands  this,  and  the  law  has  much 
regard  for  necessity ;  this  is  shown  in  decisions  under  the  Common  Law  as 
well  as  by  statutory  enactment  to  cure  obvious  defects  in  existing  laws. 

Metropolitan  Boards.  In  some  cases  several  municipalities  around 
some  large  city  may  well  be  included  in  a  general  scheme  for  water  supply 
or  for  sewerage ;  in  such  case  the  State  may  provide  a  Metropolitan  Water 
Board,  a  Sewerage  Board,  a  Park  Commission. 

State  Control.  There  is  discernible  some  tendency  to  exercise  State 
functions  to  a  greater  extent  in  controlling  or  in  directing  parts  of  the 
work  of  the  large  municipal  corporations,  in  which,  as  political  units, 
there  are  conditions  adverse  to  the  most  efficient  business  administration. 

Counties ;  Towns ;  School  Districts.  Counties  and  towns  are  also  cor- 
porate bodies.  In  New  England,  the  town  is  the  active  business  unit,  and 
the  county's  action  is  comparatively  limited ;  through  most  of  the  coun- 
try the  county  is  the  most  important  business  unit,  and  the  town's  action 
is  limited.  In  some  parts  of  the  country  the  school  district  is  a  corporate 
body  with  power  to  build  schoolhouses  and  to  issue  bonds.  An  engineer 
connected  with  any  work  for  a  town,  county,  or  school  district,  should 
make  it  a  point  to  know  the  law  with  relation  to  advertising  or  any  other 
requirements  so  as  to  secure  technical  compliance  with  such  requirements 
in  connection  with  the  work. 

Warrants  for  Town  Meeting.  In  New  England,  money  is  appro- 
priated or  work  authorized  by  "  town  meeting."  An  interesting  require- 
ment is  that  the  "  warrant,"  or  "  warning  "  as  it  is  often  called,  the  notice 
or  call  for  the  meeting,  must  specify  the  various  items  of  business  to  be 
transacted.  Action  taken  by  the  town  meeting  is  not  legal  unless  an  article 
has  been  included  in  the  warrant  providing  for  action  on  that  particular 
matter. 


7—28  CORPORATIONS 

The  town  meeting  is  a  pure  democracy  in  whose  proceedings  all  voters 
are  entitled  to  participate,  and  it  works  well  in  towns  with  small  popula- 
tion. As  population  increases,  representative  government  becomes  neces- 
sary, and  has  many  advantages,  as  well  as  some  defects.  In  cities  and  in 
counties  representative  government  usually  prevails. 

Title  in  Highways.  The  municipal  corporation  seldom  possesses  com- 
plete legal  title  to  the  highway ;  it  is  perhaps  ultra  vires  for  it  to  acquire 
such  title.  The  ultimate  title  generally  remains  in  the  abutting  owners, 
and  if  vacated  as  a  highway  the  property  reverts  to  these  owners. 

Easement  in  Highways.  The  use  of  the  streets  or  highways  must  be 
as  an  easement,  for  the  benefit  of  the  general  public.  This  easement  may 
have  resulted  from  prescription,  from  dedication,  or  through  the  exercise 
of  the  right  of  eminent  domain.  The  regulation  of  this  easement  is  exer- 
cised by  the  municipality.  The  grant  of  a  franchise  in  a  highway  comes 
from  the  legislature,  but  the  charter  often  vests  authority  in  the  munic- 
ipality to  grant  locations.  The  use  of  a  street  by  a  trolley  car  company 
is  for  the  benefit  of  the  public  so  as  to  make  this  a  public  easement,  and 
the  courts  have  decided  that  a  similar  use  of  a  street  in  a  subway  or  tunnel 
under  the  streets  is  a  public  use  for  which  the  abutting  owners  are  not 
entitled  to  extra  compensation. 

Landowner's  Right  in  Highway.  While  in  many  cases  a  municipality 
may  vacate  a  public  way,  it  has  been  decided  that  a  landowner  entitled 
to  a  right  of  way  possesses  a  right  superior  to  the  right  to  vacate  ordinarily 
possessed  by  the  municipality;  but  there  are  some  decisions  to  the  con- 
trary. The  right  of  eminent  domain  is  not  an  inherent  or  a  Common 
Law  right  of  the  municipality,  but  is  a  power  which  must  be  expressly 
delegated  by  the  State  and  exercised  by  the  municipality  strictly  in  accord- 
ance with  the  terms  of  the  statute. 

Bonds;  Warrants.  While  a  municipality  has  power  to  incur  debts, 
it  has  no  power  to  issue  bonds,  except  as  authorized  by  statute.  Even 
then  these  may  be  issued  only  for  public  purposes ;  the  building  of  either 
highways  or  railways  is  held  to  be  for  public  purposes.  In  some  parts  of 
the  country  it  is  customary,  in  the  absence  of  cash  available,  to  issue 
warrants  in  payment  for  services  or  goods :  these  are  simply  orders  on  the 
treasury,  payable  when  funds  become  available.  These  warrants  are  sub- 
stantially negotiable  and  do  in  practice  pass  from  hand  to  hand.  With 
bonds  or  with  warrants,  limitations  as  to  then-  issue  are  often  imposed  by 
statute. 

Taxation.  The  power  of  taxation  exercised  by  municipalities  is  derived 
from  the  State  and  should  be  expressly  granted  in  the  charter.  Although 
the  power  may  be  implied  in  some  cases,  it  may  be  exercised  for  public 
purposes  only.  Special  assessments  in  the  form  of  betterments  or  benefits 


CORPORATIONS  7-29 

or  otherwise  must  be  expressly  authorized,  and  the  power  must  be  exer- 
cised in  strict  conformity  to  the  statute. 

Aid  to  Railroads.  If  properly  authorized,  a  municipality  may  aid  in 
the  construction  of  railroads  either  by  subscription  or  donation,  and  may 
issue  bonds  to  secure  the  money  required.  Such  action  is  not  ultra  vires, 
as  railroads  are  public  highways  in  which  the  public  has  rights,  as  has  been 
stated  in  connection  with  the  right  of  eminent  domain. 

Officers  and  Employees.  The  work  of  most  corporations,  business  or 
municipal,  is  performed  through  the  services  of  a  number  of  employees, 
some  of  them  officers  who  are  in  a  sense  the  corporation  itself;  some  of 
them  are  essentially  agents ;  others  are  known  in  the  law  as  servants. 

The  corporation,  like  an  individual,  is  liable  for  torts  of  its  servants 
committed  within  the  course  of  their  employment,  whether  malicious, 
accidental,  or  otherwise.  The  corporation  may  even  be  criminally  respon- 
sible ;  or  it  may  be  guilty  of  contempt  of  court ;  that  is  for  either  offence 
it  may  be  fined.  In  many  cases,  however,  the  action  may  better  be  had 
against  the  individual  who  is  at  fault,  the  officer,  or  agent,  or  servant,  for 
he  can  be  imprisoned.  The  corporation  while  financially  more  responsible 
in  case  of  a  fine,  is  not  subject  to  imprisonment  which  may  reach  the  in- 
dividual, a  fact  which  may  act  as  a  deterrent.  Further  attention  to  the 
subject  of  employees  is  reserved  for  the  next  chapter. 


CHAPTER  VIII 
AGENCY.     MASTER  AND   SERVANT 

Agents  and  Servants.  In  England  there  formerly  was  a  clear  distinc- 
tion made  or  attempted  between  agents  and  servants;  a  distinction  of 
some  importance  where  many  of  the  latter  were  menials.  In  the  United 
States  at  the  present  time  there  is  a  tendency  to  minimize  any  such  dis- 
tinction and  to  use  the  word  "employee." 

There  is  a  wide  gulf  between  certain  agents  and  some  kinds  of  servants. 
A  real  estate  agent  often  has  had  no  contact  with  his  principal  except  to 
accept  the  agency  and  arrange  the  price ;  he  conducts  his  agency  by  his 
own  methods,  independently  of  his  principal  who  very  frequently  has 
weaker  financial  ability  than  the  agent.  A  farm  hand,  on  the  other  hand, 
does  the  work  required  in  the  form  and  in  other  respects  as  ordered  by 
his  master,  and  in  general  is  without  financial  responsibility.  While  the 
distinction  is  here  clear  enough,  in  many  cases  it  is  difficult  to  distin- 
guish between  the  two  classes  of  employees.  Judges  and  authors  of  law 
treatises  have  alike  been  unsuccessful  in  framing  satisfactory  definitions. 

Distinctions  between  Agents  and  Servants.  Certain  distinctions 
between  agents  and  servants,  however,  may  be  stated.  The  servant 
does  for  his  master  as  a  matter  of  service  the  things  that  he  is  hired  to  do  ; 
the  agent  represents  his  principal  in  business  transactions  of  the  sort  for 
which  he  is  employed.  The  servant  receives  orders  as  to  the  performance 
of  his  work ;  the  agent  is  intrusted  with  the  business  of  his  principal.  The 
servant  seldom  has  power  to  contract  for  his  master's  benefit ;  the  agent's 
duties  are  largely  contractual. 

The  agent  deals  with  third  parties  in  connection  with  the  property 
of  the  principal,  in  buying,  selling,  leasing,  collecting,  or  some  similar  way. 
The  servant  does  what  is  required  of  him  in  the  way  of  service  either  to 
his  master,  or  to  third  parties  for  the  benefit  of  his  master.  The  power  of 
control  by  the  master  over  the  servant  is  an  important,  perhaps  the  essen- 
tial, feature ;  this  may  sometimes  serve  to  determine  which  of  two  or  more 
persons  is  the  master  where  the  servant's  act  has  created  liability  for  some- 
one. It  is  further  true  that  a  man  may  be  an  agent  with  reference  to 
certain  of  his  duties  and  a  servant  in  certain  other  duties ;  he  may  be  at 
the  same  time  both  servant  and  agent. 

8-1 


8-2  AGENCY.     MASTER  AND  SERVANT 

The  distinction  has  practical  importance,  as  a  master  is  responsible 
for  the  acts  of  a  servant,  sometimes  in  cases  where  the  same  act  or  a  similar 
act  by  an  agent  will  not  make  his  principal  liable. 

Liability  More  Important  than  Definition.  In  many  cases  the  nature 
of  the  act  and  the  circumstances  surrounding  it  will  serve  to  establish  the 
liability,  or  lack  of  it,  of  the  principal  or  master  on  the  one  hand,  or  of 
the  agent  or  servant  on  the  other,  without  involving  subtle  distinctions  of 
definition.  At  the  trial  it  will  be  determined,  if  necessary,  whether  some 
act  involved  liability  on  the  part  of  the  principal  or  master.  The  jury 
will  pass  on  the  facts,  or  where  these  are  undisputed,  the  judge  will  deter- 
mine their  legal  effect.  If  the  action  of  the  jury  seems  legally  unsound  in 
view  of  the  facts  presented  and  the  judge's  instructions  the  judge  may  set 
aside  the  verdict  as  "  contrary  to  the  law  and  facts  in  the  case." 

Effect  of  Statute  Law.  Recent  legislation  has  provided  Statute  Law 
which  has  done  away  with  some  of  the  earlier  fine  distinctions,  and  has 
made  use  of  the  words  "  employee  "  or  "  workman."  The  greater  part  of 
such  legislation  affects  only  the  relations  between  employer  and  employee, 
and  does  not  touch  their  relations  with  third  parties.  There  is  some  ad- 
vantage in  discussing  the  law  of  agency  and  the  law  of  master  and  servant 
separately,  in  certain  respects  at  least. 

AGENCY 

Creation  of  Agency.  The  functions  of  an  agent  are  properly  contrac- 
tual. An  agency  is  created  ordinarily  either  by  appointment  or  by 
ratification.  It  may  be  express  or  implied ;  if  express,  it  may  be  either 
written  or  oral.  If  by  appointment  in  the  case  of  personal  property,  the 
authority  to  buy,  or  sell,  or  fix  prices,  may  be  either  written  or  oral,  or 
perhaps  in  whole  or  part  by  conduct ;  the  request  of  a  principal,  written 
or  oral,  followed  by  the  entrance  upon  his  duties  by  the  agent,  constitutes 
appointment. 

The  appointment  must  be  written  in  certain  cases  where  the  principal's 
act  must  be  in  writing,  but  not  in  all  such  cases.  In  some  States  it  is 
necessary  in  case  of  a  lease.  In  the  case  of  a  deed  conveying  real  property, 
or  other  instrument  which  must  be  executed  under  seal,  the  authority  of 
the  agent  must  be  under  seal  also. 

Authorization  by  Contract.  The  agency  is  brought  about  by  contract ; 
the  authorization,  when  accepted,  is  a  contract.  The  agency  may  be 
implied  as  in  other  cases  of  contract;  if  services  are  rendered,  the  law 
implies  from  their  acceptance,  not  only  the  assumption  of  responsibility 
for  the  acts,  but  also  a  promise  to  pay  for  their  performance. 

Ratification.     It   often   happens   that   someone   performs   an   act   in 


AGENCY.     MASTER  AND   SERVANT  8-3 

behalf  of  another,  for  his  benefit,  substantially  as  an  agent,  but  without 
prior  authorization,  or  in  excess  of  authority;  if  the  beneficiary  assents 
to  and  adopts  the  action,  then  by  such  "  ratification,"  as  it  is  called,  a 
relation  of  principal  and  agent  is  established. 

Express  or  Implied  Ratification.  This  ratification  may  be  express  or 
implied ;  it  may  be  written,  oral,  or  by  conduct ;  silence  is  one  phase  of 
conduct.  The  acceptance  of  benefits  from  the  act  constitutes  such  con- 
duct ;  acquiescence  has  sometimes  the  same  effect,  this  more  clearly  in  a 
case  where  the  act  was  one  in  excess  of  the  authority  of  an  agent. 

Principal  must  be  Certain.  An  act  to  be  subject  to  ratification  must, 
as  a  rule,  have  been  openly  done  by  one  posing  as  an  agent,  in  behalf  of 
the  person  who  becomes  the  principal  by  ratifying  it.  While  the  latter 
need  not  be  specified,  he  apparently  must  be  indicated  sufficiently  to  make 
his  identity  certain.  Assent  or  adoption  by  any  other  person  does  not 
create  an  agency  by  ratification. 

Assent  to  Legal  Acts  with  Knowledge.  To  constitute  a  ratification 
sufficient  to  bind  the  principal,  the  assent  of  the  principal  must  be  with 
knowledge  of  all  material  facts,  or  in  disregard  of  them.  A  principal 
may  ratify  any  act  which  he  might  himself  perform,  but  not  illegal  acts, 
nor  acts  from  which  he  would  be  estopped.  If  an  act  by  him  must  be  in 
writing  or  other  necessary  form,  his  ratification  must  also  be  in  such  form. 
A  ratification  once  made  is  irrevocable  and  binds  the  principal  to  responsi- 
bility for  the  acts  of  his  agent,  whether  in  contract  or  in  tort. 

Ratification  Binds  Parties.  When  ratification  has  taken  place,  the 
third  party  and  principal  then  become  equally  bound  as  the  parties  to  the 
contract  made  by  the  agent.  Whether  the  third  party  has  the  right  to 
withdraw  pending  ratification  seems  to  be  not  fully  settled.  The  principal 
can  not  by  ratification  give  precedence  to  the  acts  of  his  agent  over  acts 
of  his  own  in  which  strangers  had  acquired  rights ;  for  instance,  if  an  agent 
sells  goods  and  the  principal  meantime  has  sold  the  same  goods  to  a  stranger, 
the  principal  can  not  by  ratification  avoid  his  own  sale  to  the  stranger. 

Estoppel.  Somewhat  along  the  same  line,  if  a  person  has  encouraged 
or  allowed  a  third  party  to  believe  an  agency  exists,  he  is  estopped  from 
denying  such  an  agency  and  is  virtually  held  as  principal.  The  conduct 
of  the  principal  is  measured  upon  substantially  the  lines  which  constitute 
fraud  or  deceit  as  indicated  in  the  chapter  on  torts. 

Agency  by  Necessity.  There  is  further  an  agency  by  "  necessity."  A 
wife  or  minor  may  thus  act  for  the  husband  or  father  in  purchasing  neces- 
saries ;  a  shipmaster  in  buying  supplies.  In  the  case  of  delay  by  act  of  God, 
a  railroad  company  may  and  should  sell  perishable  freight. 

Minor  as  Agent.  It  is  an  interesting  fact  that  a  minor  (under  21  years) 
may  lawfully  contract  as  agent  for  another  although  he  could  not  do  so 


8—4  AGENCY.     MASTER  AND  SERVANT 

for  himself.  The  law  throws  its  protecting  arm  around  the  minor's  in- 
terests ;  the  principal  who  employs  the  minor  is  competent  to  take  care  of 
himself.  The  minor  is  not  competent,  however,  to  make  the  contract  of 
agency  between  the  principal  and  himself;  at  least  such  a  contract  is 
voidable  by  the  minor. 

Kinds  of  Agents.  In  business,  there  are  agents  to  sell,  purchase,  col- 
lect, execute  commercial  paper,  manage  business ;  to  act  as  bank  cashiers, 
shipmasters,  factors,  brokers,  auctioneers,  attorneys  at  law,  and  in  various 
other  capacities. 

Special  or  General.  An  agent  may  be  special  or  general.  A  special 
agent  is  limited  in  his  authority  to  specific  acts.  A  general  agent  ordi- 
narily has  not  unlimited  authority  or  powers,  but  has  full  authority  or 
power  to  do  all  acts  incidental,  necessary,  or  usual  to  agency  in  the  line  of 
business  in  which  he  is  engaged.  A  good  example  of  special  agency  is 
that  created  by  a  power  of  attorney  authorizing  another  to  do  specific 
acts  in  the  stead  of  the  principal.  An  example  of  a  general  agent  is  the 
manager  of  a  commercial  or  manufacturing  establishment.  It  is  evident 
that  a  corporation  can  act  only  through  its  officers  or  agents  in  general 
business  operations. 

Express  Authorization.  In  the  case  of  express  authorization  of  a 
special  agent,  the  writing  should  show  the  extent  and  character  of  the 
agency.  In  the  case  of  express  authorization  of  a  general  agent,  however, 
the  terms  can  seldom  be  complete  and  explicit.  In  general,  in  such  cases, 
any  writing  will  be  construed  liberally  to  effect  the  object,  and  favorably  to 
an  agent  as  regards  any  acts  done  in  good  faith,  and  favorably  also  to  a  third 
party.  As  an  aid  to  determining  how  far  the  agency  extends,  the  custom 
as  to  agents  and  general  usage  in  the  same  or  similar  lines  of  business 
may  be  invoked,  and  any  ratification  by  the  principal  of  acts  of  the  agent 
would  have  considerable  bearing.  The  principle  of  ratification  is  clearly 
important  in  connection  with  agency. 

That  the  line  of  cleavage  as  to  appointment  or  ratification  will  not 
always  be  clear,  must  be  evident,  and  it  is  the  legitimate  function  of  a 
suit  at  law  to  settle  any  resulting  difference  of  opinion.  The  burden  of 
proof  as  to  the  existence  of  the  agency  is  on  the  person  dealing  with  the 
agent. 

Joint  Agents.  Sometimes  two  persons  are  joint  agents.  The  general 
rule  is  that  in  such  cases  the  action  of  both  is  essential.  Where,  however, 
the  intent  is  apparently  otherwise,  or  where  custom  serves  to  determine  the 
status,  either  one  may  act.  This  is  also  true  when  partnerships  are  agents. 

Principal  Bound  by  Acts  of  Agent.  Where  the  relation  of  agency  exists, 
the  principal  is  bound  by  the  acts  of  the  agent  exercised  within  his  authority. 
He  is  bound  not  merely  by  the  agent's  contracts,  but  also  by  torts  com- 


AGENCY.     MASTER  AND   SERVANT  8-5 

mitted  by  him  while  engaged  in  acts  within  the  scope  of  his  authority.  For 
example,  where  a  fraud  is  committed  by  the  agent  for  the  principal's 
benefit  in  connection  with  making  a  contract,  or  in  case  he  entices  an 
employee  from  another  employer,  acts  characteristic  of  an  agent  rather 
than  a  servant,  the  principal  is  responsible;  the  tort  may  sometimes  be 
negligence,  although  more  often  negligence  is  an  act  characteristic  of  a 
servant  rather  than  an  agent.  The  principal,  however,  can  seldom  be 
held  to  criminal  responsibility  for  acts  of  an  agent. 

Liability  of  Agent  and  Third  Party.  The  agent  is  also  personally  liable 
for  torts  committed  by  him,  and  may  be  sued  if  the  third  party  prefers 
and  considers  his  financial  responsibility  sufficient.  In  a  similar  way  the 
third  party  is  liable  to  the  principal  for  torts  committed  in  transactions 
with  the  agent.  On  the  other  hand,  the  fraud  of  the  third  party  in  connec- 
tion with  a  contract  acts  as  a  release  if  the  principal  so  desires. 

When  Principal  is  Bound.  The  principal  is  bound  then :  first,  when 
acts  of  an  agent  are  within  the  scope  of  his  actual  authority ;  second,  when 
not  authorized,  but  ratified ;  third,  when  within  the  scope  of  his  apparent 
authority,  unless  notice  is  given  to  the  third  party.  Similarly  he  may  be 
bound  by  the  acts  of  his  agent  even  after  the  termination  of  the  agency 
in  some  cases  where  the  third  party  had  no  notice  of  such  termination,  nor 
reason  to  suspect  it. 

Notice  to  Agent.  The  agent  represents  the  principal  to  such  an  extent 
that  the  latter  is  bound  if  the  agent  acquires  knowledge  or  receives  notice 
in  matters  within  his  range  of  action ;  and  admissions  of  an  agent  within 
the  scope  of  his  authority  are  also  competent  evidence  against  the  principal. 

Delegation  of  Authority.  The  general  principle  prevails  that  the  agent 
has  no  power  to  delegate  his  authority  unless  this  is  expressly  or  impliedly 
conferred,  because  the  appointment  of  agent  is  with  recognition  of  his 
fitness.  It  is  held,  however,  that  for  ministerial  acts  performed  by  clerks 
and  not  involving  discretion,  such  authority  may  be  delegated.  In  modern 
large  business,  clerks  of  varying  responsibilities  are  used,  and  apparently 
on  the  basis  of  necessity,  delegation  of  authority  involving  discretion  is 
allowable  in  extension  of  subordinate  action  rather  than  in  the  way  of 
substitution,  at  which  the  law  will  surely  look  askance.  The  custom  of 
the  business  is  an  important  matter  in  justification  of  such  delegation  of 
authority. 

Form  of  Contract  by  Agent.  When  an  agent,  in  behalf  of  his  principal, 
makes  a  contract,  it  should  be,  in  its  form,  in  the  name  of  the  principal ; 
if  it  is  in  the  name  of  the  agent,  although  acting  for  the  principal,  the 
agent  will  be  bound  and  not  the  principal,  unless  from  other  evidence  the 
fact  of  agency  be  apparent.  The  intent  here  also  is  the  important  element, 
a  question  of  fact  for  the  jury.  A  third  party  may  sue  or  be  sued  when  the 


8-6  AGENCY.     MASTER  AND   SERVANT 

agent  has  in  his  own  name  contracted  for  an  undisclosed  principal;  in 
such  a  suit  either  the  agent,  or  the  principal  when  he  becomes  known,  may 
be  the  party  to  the  suit.  If  the  principal  intervenes,  the  right  of  the  agent 
ceases.  While,  in  the  above  cases,  the  action  indicated  may  be  taken  with 
ordinary  writings  or  oral  contracts,  yet  with  instruments  under  seal  the 
principal  must  be  stated  as  a  party,  and  the  same  rule  holds  with  negotiable 
instruments.  Sometimes  an  apparent  agent  is  the  real  principal,  and 
evidence  is  admissible  on  this  point. 

Acts  Without  Authority.  If  a  person  wrongfully  acts  for  another  with- 
out authority,  and  his  act  be  not  ratified,  the  person  thus  acting  as  agent 
is  liable  to  the  third  party,  whether  the  resulting  damages  be  determined  on 
the  basis  of  breach  of  contract,  or  on  breach  of  warranty  of  authority,  or 
by  some  other  form  of  action. 

Responsibility  of  Third  Party  to  Principal.  A  third  party,  entering 
into  a  contract  through  an  agent  properly  qualified,  is  responsible  directly 
to  the  principal.  This  is  true,  largely,  even  when  the  principal  is  un- 
disclosed, and  the  contract  was  apparently  that  of  the  agent.  This  rule 
does  not  hold  for  instruments  under  seal  or  for  negotiable  instruments.  In 
many  business  transactions  it  matters  little  who  the  other  party  is ;  but 
every  one^has  a  right  to  choose  and  if  it  appears  that  the  third  party  placed 
dependence  upon  the  agent  personally  as  the  apparent  principal,  the  agent 
will  then  be  held  to  be  the  party  to  the  transaction.  Sometimes  the  third 
party  by  mistake  or  fraud  has  received  money  or  goods  which  in  good 
conscience  he  could  not  retain;  the  undisclosed  principal  will  then  have 
his  right  of  action.  If  the  third  party  has  been  guilty  of  fraud  to  the  injury 
of  the  undisclosed  principal,  whether  or  not  by  collusion  with  the  agent, 
the  principal  again  may  sue. 

Duty  of  Agent.  In  the  relations  of  agent  and  principal  with  each  other 
it  is  the  duty  of  the  agent  to  obey  instructions  unless  illegal  or  impossible, 
or  in  emergencies,  or  where  obedience  would  impair  the  security  for  ad- 
vances made ;  to  exercise  proper  skill,  care,  and  diligence ;  to  act  in  good 
faith,  not  to  his  own  profit,  and  not  for  adverse  interests  or  as  agent  for 
both  parties  to  a  transaction;  to  give  due  information  to  his  principal; 
to  keep  accounts,  and  to  account,  keep  the  principal's  money  separate, 
and  pay  it  over  when  due  or  proper. 

Duty  of  Principal.  It  is  the  duty  of  the  principal  to  pay  the  remunera- 
tion agreed  upon,  or  in  the  absence  of  an  agreement,  the  reasonable  value 
of  the  agent's  services ;  to  reimburse  for  expenses ;  and  to  indemnify  for 
acts  performed  under  the  agency.  To  secure  these  the  agent  may,  if 
necessary,  sue  in  a  court  of  Law,  or  in  cases  of  involved  accounts,  in  a 
court  of  Equity.  In  some  cases  he  may  have  a  lien  upon  goods  of  the 
principal  in  his  possession,  that  is  he  may  have  a  right  to  hold  the  goods 


AGENCY.     MASTER  AND  SERVANT  8-7 

i 

as  security.     In  such  case  a  lawyer  should  be  promptly  consulted,  if 
possible. 

Termination  of  Agency.  An  agency  may  be  terminated  by  express  or 
implied  limitation ;  by  act  of  either  party,  provided  no  interest  has  been 
acquired  or  rights  accrued ;  by  operation  of  law ;  by  death ;  by  insanity 
or  other  incompetence ;  by  war ;  or  by  bankruptcy.  When  terminated  by 
act  of  either  party,  proper  notice  should  be  given  to  the  other  party,  and 
often  to  third  parties.  There  are  cases  of  agency,  however,  where  the 
agent  has  acquired  in  some  proper  way  interests  that  render  the  agency 
irrevocable,  but  it  is  not  important  to  discuss  such  cases  here. 

Engineer's  Interest  in  Agency.  The  engineer's  interest  in  agency  is 
many  sided,  as  he  may  occupy  the  position  of  principal,  general  agent, 
subagent,  or  third  party.  His  position  in  any  contingency  should  be  made 
clear  so  far  as  his  own  action  controls,  and  wherever  possible  he  should 
have  evidence  to  establish  his  own  status  and  that  of  others  involved,  so 
that  the  probability  of  misunderstanding  and  resulting  litigation  may  be 
reduced  to  a  minimum. 

MASTER  AND   SERVANT 

Positions  Held  by  Servants.  In  manufacturing,  in  transportation,  in 
municipal  or  other  general  construction  work,  those  employees  engaged 
in  construction,  operation,  or  maintenance,  are  in  general  servants  in  the 
eye  of  the  law.  This  seems  natural  and  clear  as  to  those  termed  workmen, 
but  it  is  also  true  of  many  holding  responsible  positions,  engineers  included. 

Contract  of  Service.  When  the  relation  of  master  and  servant  exists, 
the  master  is  entitled  to  services  and  the  servant  to  wages.  The  employ- 
ment of  the  servant  is  under  a  contract  which  may  be  expressed,  but  often 
is  implied ;  services  rendered  are  presumed  to  be  for  wages  and  not  gratui- 
tous; for  adequate  wages  in  the  absence  of  express  agreement,  oral  or 
written.  Unless  necessary  under  the  Statute  of  Frauds  or  specially  re- 
quired otherwise,  the  agreement  need  not  be  in  writing. 

Terms  of  Service.  The  time  of  beginning  service,  the  period,  the  terms 
of  payment,  and  other  conditions  are  commonly  questions  of  fact  to  be  deter- 
mined in  the  usual  way.  In  cases  of  ordinary  employment,  custom  deter- 
mines many  questions.  Unless  the  length  of  service  be  specified,  it  may 
be  terminated  by  either  employer  or  employee  after  notice  which  must  be 
reasonable.  If  employment  and  term  of  payment  of  wages  be  for  the  week 
or  the  month,  a  notice  of  a  week  or  month  will  be  deemed  reasonable  and 
necessary.  Where  employment  is  by  the  year,  rather  than  for  a  year,  a 
month's  notice  would  probably  be  held  reasonable;  where  for  a  year,  a 
similar  notice  of  a  month  previous  to  the  end  of  the  term  would  probably 
also  serve. 


8-8  AGENCY.     MASTER  AND   SERVANT 

Dismissal  or  Withdrawal.  Dismissal  by  the  employer,  or  withdrawal 
by  the  employee  without  adequate  cause  and  without  notice,  constitutes 
a  breach  of  contract.  In  case  of  improper  dismissal  the  employer  is  liable 
for  wages  for  the  unexpired  term  of  service,  with  board  and  keep  if  part 
of  the  wages.  The  employee  is  liable  for  any  damages  sustained  by  a 
breach  in  his  part  and,  from  this  standpoint,  may  find  it  impossible  to  collect 
wages  otherwise  then  due;  the  employer,  while  legally  entitled  to  any 
damages  suffered,  may  often  be  unable  to  collect  from  such  an  employee 
on  account  of  the  latter's  lack  of  financial  responsibility. 

Cause  of  Dismissal.  Sometimes  it  is  difficult,  even  for  the  parties, 
to  clearly  know  who  broke  the  relation ;  who  did  so  is  a  matter  of  evidence 
and  the  jury  decides.  Dismissal  for  cause  often  results  from  breach  of 
contract  by  the  employee.  Discharge  may  be  for  adequate  cause  such  as 
disobedience,  want  of  respect,  dishonesty,  drunkenness,  insubordination, 
or  other  misconduct ;  or  for  incompetence,  general  neglect,  or  absence  from 
work;  all  of  which  the  jury  will  decide  as  questions  of  fact.  As  to  in- 
competence, the  engineer  employee  should  realize  that  the  skill  required 
of  him  is  that  of  the  ordinary  average  of  the  profession  as  a  body,  or,  in  a 
position  of  special  responsibility,  the  average  skill  of  others  in  like  positions. 
Illness  which  prevents  service  may  often  terminate  service ;  a  short  illness 
commonly  will  not  do  so ;  in  any  case  it  is  not  a  breach  of  contract.  The 
cause  for  discharge  may  not  be  known  or  disclosed  at  the  time;  that  it 
really  exists,  legally  suffices. 

Some  Rights  of  Employee.  On  the  other  hand,  the  employer  must 
furnish  work  to  the  employee  paid  by  the  job.  This,  or  other  failure  of  the 
employer  to  permit  service,  is  equivalent  to  dismissal  or  to  notice.  Bank- 
ruptcy may  terminate  employment ;  in  this  case,  in  many  States,  the  wage 
earner  is  made  a  preferred  creditor.  The  requirement  of  service  outside 
the  reasonable  range  of  duties  for  which  the  employee  is  hired  is  also  a 
breach  of  contract  by  the  employer. 

Locality  of  Employment.  Similarly  a  requirement  to  work  in  a  different 
locality  cannot  ordinarily  be  enforced.  In  all  such  cases,  however,  condi- 
tions and  customs  may  need  to  be  considered  to  determine  whether  a 
requirement  is  within  the  reasonable  purpose  and  intent  of  the  employment. 
The  sanitary  or  hydraulic  engineer  in  the  office  of  a  consulting  engineer 
would  reasonably  expect  service  in  various  localities;  a  mining  engineer 
might  perhaps  expect  nothing  else  than  service  away  from  office  head- 
quarters. A  definite  understanding  as  to  this  matter  is  desirable  both  for 
the  employee,  the  young  engineer,  and  for  his  employer.  The  contract 
between  any  employer  and  employee,  whether  it  be  oral  or  written,  should 
show  with  reasonable  certainty  the  character  of  the  work  to  be  performed. 
Very  commonly  the  interchange  of  letters,  written  with  care,  serves  to  fix 


AGENCY.     MASTER  AND   SERVANT  8-9 

the  terms  of  the  contract ;  a  formal  contract  sometimes  suggests  strained 
relations  and  is  seldom  necessary. 

Employee's  Remedy  for  Discharge.  In  case  of  wrongful  discharge,  the 
employee  may  choose  between  two  courses ;  he  may  consider  the  contract 
first,  as  continuing ;  or  second,  as  ended.  In  the  latter  case  he  is  entitled 
to  payment  for  service  rendered  "  quantum  meruit  ";  in  the  former  case  he 
will  be  entitled  at  the  close  of  the  term  of  contract  to  draw  pay  for  the  full 
term  of  contract  less  what  he  has  earned  in  the  meantime  or  might  have 
earned  if  diligent.  It  is  his  duty  to  use  ordinary  diligence  in  seeking  other 
employment  in  line  with,  or  not  inconsistent  with,  the  duties  for  which  he 
was  employed.  If  the  discharge  or  breach  of  contract  comes  from  a  failure 
of  the  employer  to  give  him  work,  the  employee  need  not  show  an  offer  to 
work;  willingness,  readiness  to  work  is  sufficient. 

Letter  of  Recommendation.  When  a  servant,  an  employee,  is  dis- 
charged or  his  employment  is  ended,  the  employer  is  not  bound  to  give  a 
letter  of  recommendation  to  the  departing  employee.  He  is  privileged  to 
frankly,  but  truly,  give  information  when  solicited ;  but  the  use  of  a  black- 
list, or  organized  effort  to  prevent  further  employment  of  a  former  em- 
ployee, has  the  quality  of  conspiracy  and  is  illegal. 

Products  of  Employee's  Labors ;  Inventions.  In  general,  the  master  is 
entitled  to  whatever  his  servant  earns  from  others;  but  the  employer  is 
not  entitled  to  earnings  made  outside  the  hours  of  service  and  independent 
of  his  service.  The  question  arises  sometimes  as  to  ownership  in  inventions, 
and  the  rule  seems  to  be  that  inventions  which  have  a  direct  and  immediate 
connection  with  the  work  and  duties  of  the  employee  and  are  made  during 
his  hours  of  employment  belong  to  the  employer ;  this  is  more  certainly 
the  case  when  the  employee  is  engaged  in  what  may  be  called  research  work. 
Inventions  made  outside  the  hours  of  service  and  not  in  the  line  of  service 
of  the  employee  clearly  belong  to  the  employee.  There  is  bound  to  exist  a 
twilight  zone  of  uncertainty,  where  the  question  of  intent  may  be  important. 

Statute  Provisions.  In  addition  to  what  the  Common  Law  requires  as 
to  payment  of  wages,  there  are  in  many  States,  statute  requirements 
governing  the  computation  of  wages,  rates,  times  of  payment,  working 
hours,  treatment  in  case  of  breach  of  contract,  and  other  miscellaneous 
provisions. 

Responsibility  for  Acts  of  Servant.  While  in  general  a  man  shall  be 
held  to  answer  for  his  own  wrongs  committed,  yet  when  an  innocent  third 
party  was  injured  through  the  act  of  a  servant  financially  irresponsible, 
it  seemed  just,  under  the  Common  Law,  that  the  master,  as  a  rule  financially 
responsible,  should  right  the  wrong  done  by  the  servant  controlled  by  him 
while  in  the  performance  of  an  act  which  the  master  either  directed  him 
to  do  or  might  reasonably  expect  him  to  do  in  his  service,  although  not  in 


8-10  AGENCY.     MASTER  AND   SERVANT 

a  wrongful  manner.  The  loss  should  fall,  not  on  the  innocent  third  party, 
but  with  some  show  of  justice  on  the  master  who  at  least  chose  his  servant 
and  had  some  chance  to  foresee  a  wrongful  result  and  perhaps  guard  against 
it.  Now,  with  the  law  once  established,  the  master  chooses  his  servant 
with  full  knowledge  that  he  assumes  responsibility  for  his  servant's  acts. 
Rule  Stated.  Whatever  the  logic  or  history  of  the  rule,  the  master 
is  responsible  for  the  acts  of  his  servant  done  within  the  general  range  of 
his  duties ;  the  law  has  stated  that 

"the  master  is  liable  for  the  torts,  negligences  and  other  malfeasances  or  misfea- 
sances, and  omission  of  duty  of  his  servant,  in  the  course  of  his  employment  although 
the  principal  did  not  authorize  them,  or  justify  or  participate  in,  or  indeed  know 
of  such  misconduct,  or  even  if  he  forbade  or  disapproved  them." 

Nor  does  it  matter  that  it  was  malicious  on  the  part  of  the  servant.  This 
means  that  the  employer  is  responsible  for  money  damages  to  cover  an 
injury  inflicted ;  he  is  not  criminally  responsible  unless  the  act  was  definitely 
authorized  by  him  or  unless  he  was  criminally  negligent  in  selecting  a  reck- 
less or  inefficient  servant. 

Essential  Points.  The  essential  points  are  that  the  relation  of  master 
and  servant  must  exist,  and  that  the  servant  must  have  been  at  the  time 
upon  his  master's  business  and  acting  in  the  line  of  his  duties.  In  a  case 
at  law,  the  critical  point  often  will  be  whether  the  servant  was  acting  in 
the  line  of  his  duties,  although  there  may  be  also  a  question  as  to  the  exist- 
ence of  the  relation  of  master  and  servant.  In  manufacturing,  in  trans- 
portation, or  in  large  construction  work,  most  employees  have  their  duties 
well  defined  although  some  do  not. 

Employee's  Negligence.  While  the  employee's  act  may  be  a  nuisance 
or  fraud,  or  other  form  of  tort,  the  law  is  of  interest  largely  along  the  line 
of  negligence.  Negligence  on  the  part  of  an  employee  may  involve  injury 
to  property  or  to  persons,  and  a  person  injured  may  be  either  another  em- 
ployee in  the  same  service  or  some  outsider  quite  disconnected  with  such 
service.  In  the  latter  case  the  law  clearly  holds  the  master  responsible 
for  any  negligence  of  his  servant.  While  the  master  is  clearly  liable  to  an 
injured  third  party,  the  servant  is  equally  so,  and  the  injured  party  may 
pursue  his  remedy  against  the  servant  if  he  thinks  best,  but  will  seldom  do 
so  because  of  lack  of  financial  ability  on  the  part  of  the  servant. 

Fellow-Servant  or  Co-Employee.  Formerly  the  master  was  responsible, 
in  an  entirely  similar  way,  to  one  employee  for  the  wrongful  acts  of  another 
employee.  After  a  time,  without  statutory  interference,  the  Common 
Law,  under  changed  conditions,  held  that  the  master  was  not  liable  for 
injuries  to  one  employee  from  the  wrongful  act  of  his  "  fellow-servant," 
or  "  co-employee." 


AGENCY.     MASTER  AND   SERVANT  8-11 

Reason  for  Old  Rule.  In  earlier  days  employers  were  often  men  of 
small  means,  and  there  was  hardship  as  well  as  apparent  injustice  in  holding 
them  responsible  where  there  was  no  personal  negligence  on  their  part. 
The  employee  was  as  well  qualified  as  his  employer  to  judge  of  the  skill 
and  competence  of  his  fellow-worker,  and  could  wisely  be  held  to  assume  the 
risk  of  working  with  him.  Furthermore,  employees  in  general,  as  well  as 
the  community,  would  suffer  if  an  employer  was  driven  to  the  wall  by  the 
payment  of  large  sums  for  personal  injuries.  The  rule  was  probably  a 
good  one. 

With  larger  enterprises  and  especially  with  large  corporations,  it  has 
come  about  that  different  classes  or  groups  of  employees  have  had  nothing 
in  common  with  each  other.  The  employer  often  has  large  financial  ability, 
and  can  in  any  event  find  an  insurance  company  to  insure  him  against 
damages  for  personal  injuries. 

Assumption  of  Risk.  There  developed  along  with  this  law  of  fellow- 
servant  and  perhaps  as  a  part  of  it,  the  principle  that  a  workman  entering 
into  employment  saw,  or  knew  and  accepted,  the  ordinary  risks,  some- 
times extra  hazardous,  involved  in  the  employment,  and  that  the  master 
was  not  responsible  for  injuries  to  which  the  employee  knew  he  was  liable. 

Contributory  Negligence.  The  doctrine  of  contributory  negligence, 
which  affected  third  persons  as  well  as  employees,  also  entered  into  the 
matter.  Under  this  rule  of  law  the  employer  was  not  liable  to  the  employee 
if  any  negligence  on  the  part  of  the  latter  contributed  appreciably  to  the 
injury.  In  some  States  the  burden  of  proof  was  on  the  employee  suing; 
he  must  prove  freedom  from  contributory  negligence  on  his  part.  What 
constituted  contributory  negligence  was  sometimes  held  to  be  a  matter 
of  law  for  the  judge  to  decide,  and  not  of  fact  for  the  jury ;  although  in 
some  jurisdictions  and  in  some  cases,  it  was  regarded  as  a  question  of  fact 
for  the  jury  to  decide.  Statute  Law  in  some  States  now  specifically  pro- 
vides that  the  question  of  contributory  negligence  is  for  the  jury  to 
decide. 

Employer's  Responsibility.  Under  the  Common  Law  the  employer 
was,  however,  guilty  of  negligence  if  he  was  personally  careless,  or  if  he 
allowed  his  premises  or  plant  to  remain  in  dangerous  condition  when  he 
knew  or  ought  to  know  that  their  condition  was  dangerous.  He  was 
under  legal  obligation  to  provide  and  maintain  suitable  and  fit  materials 
and  plant  for  the  work ;  to  keep  the  premises  in  safe  condition  so  far  as 
possible  and  to  so  conduct  his  business  as  not  to  render  it  unnecessarily 
dangerous  to  employees,  and  to  exercise  reasonable  care  in  the  selection 
of  competent  employees  and  in  the  number  necessary. 

Ordinary  Care  Required.  The  measure  of  the  employer's  Common 
Law  duty  in  such  matters  is  ordinary  care,  such  care  as  does  not  indicate 


8-12  AGENCY.     MASTER  AND   SERVANT 

negligence,  which  is  treated  more  fully  in  a  preceding  chapter  on  torts. 
The  definition  of  what  is  ordinary  care,  or  on  the  contrary,  what  is  negli- 
gence, is  the  duty  of  the  court  in  the  instructions  to  the  jury.  What  the 
facts  are  in  the  case  bearing  upon  care  or  negligence  are  for  the  jury  to 
decide.  The  decision,  where  there  is  conflict  of  testimony,  is  for  the  jury, 
acting  under  the  judge's  instructions. 

Kind  of  Plant  Demanded.  Under  this  phase  of  the  Common  Law, 
the  master's  duties  do  not  require  him  to  furnish  the  best,  safest,  or  newest 
appliances  or  to  change  them  for  new  inventions ;  but  the  plant  must  be 
such  as  is  ordinarily  sufficient  for  the  purpose,  or  such  as  is  in  general  use, 
and  reasonably  safe  according  to  the  customs  and  ordinary  risks  of  the 
business.  The  master  must  not  allow  his  plant  to  become  dangerous 
through  lack  of  repair  or  from  age  and  deterioration.  For  hidden  defects 
the  employer  is  not  responsible,  and  it  should  be  remembered  that  "  defec- 
tive "  and  "  dangerous  "  are  not  necessarily  synonymous  terms.  The 
standard  of  care  demanded  is  that  of  an  average  prudent,  cautious,  and 
skilful  man  under  the  circumstances  existing.  That  later  events  prove 
that  some  special  device  or  precautions  would  have  prevented  an  accident 
does  not  tend  to  show  negligence. 

Negligence  of  Employees.  Furthermore,  the  master  is  not  responsible 
at  Common  Law  for  careless,  unnecessary,  or  inappropriate  use  of  an  appli- 
ance by  the  employee,  or  by  a  co-employee,  or  for  a  failure  by  the  employee 
or  co-employee  to  keep  the  appliance  in  repair.  The  contributory  negli- 
gence of  the  employee,  or  the  negligent  act  of  the  co-employee,  exempts 
the  employer  from  liability. 

Reporting  Defects.  Upon  the  employee  has  devolved  some  duty  to 
report  to  his  employer  any  defects  or  dangerous  lack  of  repair  beyond 
what  it  is  his  duty  to  put  in  order  himself ;  a  failure  to  do  so  relieves  the 
employer  whether  it  be  as  contributory  negligence,  or  the  assumption  of  a 
known  risk  of  which  the  employee  often  has  better  knowledge  than  the 
master ;  a  promise  by  the  employer  to  repair  relieves  the  employee ;  but 
if  repair  is  not  made  within  a  reasonable  time  the  employee  is  deemed  to 
have  waived  his  objections. 

Opportunity  of  Disagreement.  The  opportunity  for  a  conflict  of 
interests  or  for  a  disagreement  as  to  facts  in  these  matters  makes  a  lawsuit 
probable  and  entirely  reasonable.  The  legitimate  purpose  of  a  suit  is  to 
settle  just  such  matters. 

Care  in  Selecting  Employees.  Where  the  fault  lay  in  the  wrongful 
act  of  a  co-employee,  the  question  often  arose  whether  the  employer 
exercised  proper  care  in  the  employment  of  the  co-employee;  this  was 
quite  true  in  general,  but  was  of  peculiar  importance  where  the  co-employee 
held  some  superiority  of  position  or  authority.  The  question  of  the  em- 


AGENCY.     MASTER  AND   SERVANT  8_13 

plover's  knowledge,  or  duty  to  know,  as  to  the  character  of  the  co-employee 
has  been  again  a  source  of  controversy  as  to  the  facts. 

Regulations  for  Safety.  The  employer  again  owes  a  duty  to  exercise 
control  over  the  business  through  proper  regulations  for  its  safe  conduct. 
How  far  an  accident  is  due  to  imperfect  control  by  the  employer,  and  how 
far  to  lack  of  obedience  by  employees,  may  become  a  source  of  controversy. 

Warning  against  Danger.  The  employer  furthermore  owes  a  duty  to 
warn  or  to  impart  to  the  employee  knowledge  of  latent  dangers  or  special 
precautions  within  the  knowledge  of  the  employer  and  unlikely  to  be 
appreciated  by  the  employee  unless  specially  informed,  but  not  of  such 
dangers  as  the  employee  might  equally  appreciate ;  such  risks  the  employee 
assumes  with  the  service. 

Who  are  Co-Employees  ?  A  further  question  has  been  the  subject  of 
controversy,  and  with  different  rules  prevailing  in  different  States.  Who 
are  fellow-servants  or  co-employees?  If  an  employer  carries  on  several 
distinct  lines  of  business,  the  employees  in  one  line  are  clearly  not  co- 
employees  of  those  in  another  line.  If  two  such  lines  of  business  are  com- 
bined, and  the  two  sets  of  employees  seldom  have  contact  with  each 
other,  in  some  States  they  are  co-employees  and  in  others  not. 

Vice-Principal.  It  is  further  held  in  some  States  that  certain  employees 
have  sufficient  authority  so  that  they  occupy  a  position  of  "  vice-principal  " 
and  their  acts  are  the  acts  of  the  employer  and  not  of  a  co-employee.  In 
1884,  the  U.  S.  Supreme  Court  held  that  the  wrongful  act  of  the  conductor 
of  a  train  was  the  act  of  the  railroad  company,  and  not  of  a  co-employee,  in  a 
case  where  the  locomotive  engineer  of  another  train  was  hurt  in  a  collision. 
This  was  a  new  application  of  the  Common  Law  to  meet  modern  conditions, 
and  at  the  time  occasioned  much  comment.  The  rule  has  not  prevailed 
in  all  States.  The  various  States  are  each  sovereign  and  are  not  controlled 
by  the  U.  S.  courts,  although  the  opinions  of  the  latter  always  have  great 
weight,  as  has  been  stated  previously. 

Contributory  Negligence.  The  question  of  contributory  negligence 
has  been  briefly  referred  to.  The  courts  in  the  various  States  do  not  follow 
a  uniform  rule.  In  general,  if  the  employee  had  shown  negligence  which 
proximately  contributed  to  the  accident,  the  employer  is  not  liable.  In 
applying  this  rule  some  difficulty  results.  In  some  States  there  is  a  modifica- 
tion of  the  doctrine  known  as  "  comparative  negligence,"  where  some 
small  degree  of  negligence  by  the  employee  is  unimportant  if  gross  negli- 
gence occurred  on  the  part  of  the  employer.  Due  to  the  somewhat  diver- 
gent views  of  the  courts  in  different  States,  and  the  uncertain  action  of 
juries,  together  with  the  question  as  to  how  far  the  court  and  how  far  the 
jury  determines  in  a  specific  case  whether  contributory  negligence  existed 
to  free  the  employer  from  liability,  the  abstract  question  of  responsibility 


8-14  AGENCY.     MASTER  AND   SERVANT 

is  not  for  any  layman,  engineer,  or  otherwise  to  determine  as  assuring  the 
outcome  of  a  lawsuit  when  this  question  is  involved. 

Master  and  Servant  Rule  Unsatisfactory.  The  law  of  master  and 
servant,  taking  into  account  its  developments,  was  not  in  its  essence  bad 
law,  but  under  modern  conditions  its  operation  had  proved  very  unsatis- 
factory. In  the  case  of  large  business  concerns,  whether  corporations  or 
not,  the  employee  had  no  remedy  in  the  case  of  hidden  defects ;  obvious 
defects  he  must  report,  and  unfortunately  persistent  effort  in  this  direction 
on  his  part  sometimes  meant  dismissal.  Furthermore,  the  opportunity  to 
raise  questions  of  law  and  questions  of  fact  was  unusually  great  in  the  event 
of  a  trial  at  law. 

If  the  employee  was  injured  his  employer  had  adequate  financial  re- 
sources to  employ  able  lawyers  and  to  secure  technical  expert  testimony  for 
which  a  fee  of  fifty  dollars  a  day  was  not  unusual.  In  most  cases  neither 
the  able  lawyer  nor  the  technical  expert  was  within  the  reasonable  reach 
of  the  employee. 

A  common  outcome  was  the  undertaking  of  the  case  by  some  lawyer  for 
a  contingent  fee,  based  in  amount  upon  the  size  of  the  award  for  damages  if 
any  was  obtained,  and  this  frequently  was  as  much  as  one  half  the  award. 

EMPLOYERS'  LIABILITY  ACTS 

Scope  of  Acts  of  Relief.  In  the  course  of  time  it  became  apparent  that 
Statute  Law  ought  to  be  enacted  to  give  better  protection  to  the  employee. 
The  relief  sought  through  statutory  enactments  has  been  provided  in  part 
under  the  name  of  Employers'  Liability  Act,  although  in  some  cases 
more  general  laws  have  effected  the  same  purpose.  Some  of  these  laws 
flatly  deny  to  the  employer  the  defense  of  common  employment ;  others, 
to  the  same  effect,  declare  the  liability  of  the  employer  to  an  employee  to 
be  the  same  as  to  a  stranger.  In  some  States  this  rule  applies  under  all 
circumstances ;  in  others  under  specified  conditions  only,  such  as  a  defect 
in  plant,  the  act  of  a  superintendent  or  of  any  other  to  whose  orders  the 
employee  must  conform,  or  obedience  to  regulations  from  the  employer. 
Some  statutes  specify  the  liability  of  the  employer  for  acts  of  "  superior 
servants  "  and  exempt  him  for  acts  of  "  servants  of  the  same  grade  "  or 
of  "  servants  in  the  same  department." 

Provisions  of  Employers'  Liability  Act.  The  Employers'  Liability  Act 
of  one  of  the  States,  has  held  the  employer  liable  for : 

"Defect  in  condition  of  way,  works,  plant,  or  machinery,  caused,  undiscovered 
or  unremedied  by  the  negligence  of  the  employer,  or  some  person  intrusted  with 
such  duty. 

"Negligence  of  fellow-servant  exercising  some  superintendence  in  the  case. 


AGENCY.     MASTER  AND   SERVANT  8—15 

"Negligence  of  some  one  to  whom  the  injured  servant  was  bound  to  and  did 
conform,  with  resulting  injury. 

"An  injury  due  to  rules  or  by-laws  for  which  employer  had  responsibility. 

"Negligence  of  fellow-servant  in  charge  of  any  switches,  signals,  locomotives, 
or  trains  on  a  railway." 

This  law  while  marking  an  advance,  nevertheless  has  failed  to  reach 
several  of  the  difficulties.  Under  it  the  employee  still  assumes  something 
of  the  risk  of  hazardous  employment ;  if  he  cares  to,  he  may  by  contract 
waive  his  rights  (and  may  be  required  to  before  employment  is  secured). 
The  act  does  not  help  matters  unless  the  co-employee  at  fault  exercised 
some  functions  of  superintendence  or  special  defined  responsibility,  and 
the  employee  still  must  show  absence  of  contributory  negligence  on  his 
part  (in  many  States).  Moreover,  he  generally  has  to  give  to  his  lawyer 
one  half  or  more  of  any  sum  awarded,  and  is  likely  to  have  opposed  to 
him  the  best  skill  and  all  the  resources  that  the  large  insurance  company 
possesses,  including  the  employment  of  competent  and  expensive  engineer- 
ing and  medical  experts.  The  opportunity  for  expensive  litigation  is  not 
diminished  by  this  act ;  in  interpreting  its  provisions,  it  is  perhaps  rather 
increased. 

Defects  of  Act.  The  statutes  of  each  State  must  be  read  to  find  the 
provisions  of  any  employers'  liability  act  or  similar  statutory  provision. 
These  acts  failed  to  reach  many  of  the  difficulties  requiring  a  remedy.  The 
necessity  for  bringing  a  suit  at  law,  securing  the  services  of  technical  experts, 
paying  the  lawyer's  contingent  fee,  together  with  the  difficulty  of  fixing  the 
responsibility  of  the  employer,  and  in  some  States,  the  omission  of  any 
scale  of  amounts  recoverable,  still  left  the  remedy  very  unsatisfactory  to 
the  employee ;  moreover,  the  difficulty  as  to  contributory  negligence  was  in 
most  States  not  done  away  with.  The  recognition  of  these  defects  and 
of  the  almost  hopeless  burden  which  they  imposed  upon  injured  employees 
led  to  the  passage  of  Workmen's  Compensation  Acts. 

WORKMEN'S  COMPENSATION   ACTS 

Common  Provisions  of  Act.  In  a  large  number  of  States,  what  are 
called  "  Workmen's  Compensation  Acts  "  represent  the  latest  form  of 
legislation  which  bids  fair  to  extend  to  all  the  States.  In  1917  as  many  as 
33  States  had  passed  such  acts. 

The  law  in  Massachusetts,  and  in  substantial  accord  in  other  States, 
provides  for  compensation  to  a  workman  for 
"personal  injury  arising  out  of  and  in  the  course  of  his  employments" 
specifying,  however,  that : 

"If  the  employee  is  injured  by  reason  of  his  serious  and  wilful  misconduct,  he 
shall  not  receive  compensation." 


8—16  AGENCY.     MASTER   AND   SERVANT 

Under  this  law  as  first  passed  and  still  in  force  in  1917  the  employer 
may  become  a  "  subscriber  "  by  joining  a  Cooperative  Employees'  Insur- 
ance Association  authorized  by  the  act  or  by  taking  out  insurance  in  an 
authorized  private  company.  If  the  employer  fails  to  become  such  "  sub- 
scriber "  the  act  provides  that : 

"it  shall  not  be  a  defence : 

(1)  That  the  employee  was  negligent. 

(2)  That  the  injury  was  caused  by  the  negligence  of  a  fellow  employee. 

(3)  That  the  employee  had  assumed  the  risk  of  the  injury." 

The  act  further  provides  that  the  employee  shall  come  under  the 
provisions  of  the  act  unless  he  promptly  after  employment  states  his  choice 
and  desire  to  depend  upon  his  Common  Law  remedy. 

Scale  of  Payment.  The  act  further  provides  a  scale  of  payment  for 
various  injuries,  and  for  beneficiaries  differing  somewhat  from  those  rec- 
ognized by  previous  provisions  of  the  law;  for  the  appointment  of  an 
Industrial  Accident  Board  to  investigate  injuries  and  apportion  compensa- 
tion without  resort  to  a  court,  and  with  power  to  fix  fees  for  attorneys  and 
physicians.  A  further  provision  in  Massachusetts  is  for  an  association  of 
employers  of  ample  size  and  financial  responsibility  to  take  the  place  of 
privately  managed  insurance  associations  if  the  employer  elects  to  join 
such  association  of  employers.  There  are  provisions  in  other  States  by 
which  some  form  of  self-insurance  is  provided  for  employers. 

Acceptability  to  Employers.  While  the  total  amount  paid  for  accidents 
under  such  a  statute  may  be  larger  than  had  previously  been  the  case,  many 
employers  are  found  to  feel  reconciled,  or  even  content,  in  view  of  the  fact 
that  the  workman  receives  practically  all  that  is  paid  out ;  while,  in  view 
of  the  employer's  saving  in  lawyer's  and  expert's  fees  and  in  court  costs,  the 
outgo  on  the  whole  may  prove  to  be  not  much  greater  than  formerly. 

In  Massachusetts,  farm  laborers  and  domestic  servants  are  not  included 
in  the  operation  of  the  act.  In  some  other  States  its  action  is  restricted 
to  employers  who  have  five  or  more  employees  or  some  similar  small 
number.  The  omission  of  farm  employees  was  well  calculated  to  facilitate 
the  passage  of  an  act  of  this  character. 

The  statute  for  any  State  in  question  should  be  carefully  examined,  and 
from  year  to  year  amendments  should  be  noted  as  they  are  frequent  in 
so  important  a  statute,  rather  new  in  character  and  scope. 

INDEPENDENT  CONTRACTOR 

Definition.  It  is  not  true  that  all  persons  under  employment  are 
servants.  Where  one  person  contracts  to  do  a  specific  piece  of  work  for 
another,  he  does  it  very  often  as  an  "  independent  contractor."  The 


AGENCY.     MASTER  AND   SERVANT  8_17 

servant  works  under  the  continued  direction  and  control  of  the  employer ; 
the  independent  contractor  is  engaged  to  do  a  specific  job,  and  as  to  methods 
and  means  is  largely  independent  of  the  party  who  ordered  the  work  done ; 
his  obligation  is  to  furnish  a  proper  completed  result,  in  many  cases  furnish- 
ing material  as  well  as  performing  or  providing  the  labor. 

Circumstances  Surrounding.  For  the  purpose  of  determining  the  status 
of  the  independent  contractor,  it  is  not  conclusive  that  payment  is  by  the 
job,  or  to  the  contrary  by  the  day  or  its  equivalent.  All  the  circumstances 
surrounding  the  employment,  the  kind  of  work  undertaken,  the  independ- 
ent character  of  the  business  of  the  contractor,  his  employment  of  subordi- 
nates, are  elements  entering  into  the  determination.  Whether  the  em- 
ployer often  or  regularly  employs  servants  or  contractors  for  similar  work 
may  be  of  importance  also.  Whether  the  employer  has  the  right  to 
terminate  the  employment  at  any  time  has  significance,  although  it  is 
not  conclusive. 

Direction  of  an  Engineer.  The  fact  that  the  work  is  done  under 
specifications  as  to  the  manner  in  which  the  work  shall  be  carried  on,  that 
the  work  is  done  under  the  general  supervision  of  an  engineer,  or  that  the 
employer  reserves  the  right  to  demand  the  discharge  of  an  employee  deemed 
by  him  incompetent,  does  not  destroy  the  relation  of  independent  con- 
tractor. In  most  important  contracts  for  public  work  such  provisions 
exist,  where  the  character  of  independent  contractor  can  not  well  be  ques- 
tioned. 

Architects  and  Engineers.  The  architect  who  inspects  the  construction 
of  a  house  is  not  an  employee  of  the  owner.  What  is  the  status  of  an 
engineer  ?  If  hired  directly  by  a  city  or  railroad  company  or  an  individual, 
he  is  an  employee ;  if  hired  directly  by  an  engineering  firm  employed  by  a 
city  to  report  upon  a  scheme  for  water  supply,  or  grade-crossing  abolition, 
or  electric  lighting,  or  to  test  boiler  and  engine  plants,  he  is  the  employee 
of  the  independent  contractor  and  not  of  the  city  or  railroad  or  other  in- 
dividual employer. 

Opportunity  for  Misunderstanding.  It  is  well  to  appreciate  that  the 
terms  under  which  work  is  done  are  often  none  too  explicit,  and  frequently 
oral ;  that  there  is  an  opportunity  for  a  disagreement  as  to  the  facts  deter- 
mining whether  a  man  was  an  employee  or  independent  contractor,  with 
a  resulting  lawsuit ;  and  that  the  distinction  becomes  important  if  a  ques- 
tion arises  whether  a  workman  is  an  employee  and  included  under  the 
provisions  of  a  "  Workmen's  Compensation  Act,"  although  in  some  cases 
Statute  Law  has  provided  that  the  employer  is  liable  to  servants  of  an 
independent  contractor.  The  careful  engineer  will  attempt  to  avoid  diffi- 
culty of  this  sort  in  advance,  if  opportunity  occurs;  or,  in  a  case  where 
injury  has  resulted,  will  endeavor  to  secure  such  facts  touching  this  matter 


8-18  AGENCY.     MASTER  AND   SERVANT 

as  he  may  in  his  client's  interest,  as  well  as  facts  against  his  client's  interest. 
The  lawyer  ought  to  know  both  sides  of  the  case,  whether  it  be  to  indicate 
the  desirability  of  a  private  settlement  or  to  allow  him  to  understand  the 
case  in  all  its  bearings. 

Independent  Contractor  Responsible.  The  employer,  whether  munic- 
ipality, other  corporation,  or  individual,  is  in  general  not  responsible 
personally  or  otherwise  to  third  parties,  to  other  employees,  or  to  the 
employees  of  the  contractor  for  the  negligent  or  other  wrongful  acts  of  the 
independent  contractor.  The  relation  of  master  and  servant  is  completely 
absent.  Contracts  sometimes  specifically  provide  that  the  contractor 
shall  be  responsible  for  the  negligence  of  his  employees. 

Exceptions.  If,  however,  the  specifications  or  other  directions  to  the 
contractor  are  the  cause  of  some  injury  which,  except  for  such  instructions, 
would  not  have  occurred,  the  employer,  and  not  the  contractor,  is  liable. 
The  same  is  true  where  the  character  of  the  work  naturally  or  necessarily 
brings  about  the  injury ;  where  the  result  is  due  not  to  the  way  the  work 
is  done,  but  to  its  being  done  at  all ;  or  where  defective  plans  and  methods 
caused  the  injury  and  not  the  way  they  aje  carried  out.  So  also  in  the 
case  of  work  so  inherently  dangerous  that  injury  will  result  unless  extraor- 
dinary precautions  are  taken,  where  the  employer  should  see  that  they  are 
taken.  Where  the  employer  exercises  interference  with  the  work  in  a 
way  to  contribute  to  the  injury,  the  employer  and  not  the  contractor  is 
liable.  The  power  or  authority  which  an  engineer  has  over  the  contractor 
in  many  classes  of  work  is  such  that  the  engineer  should  guard  against 
exercising  his  control  in  such  a  way  or  in  such  matters  that  the  employer 
may  become  responsible  and  liable  for  injuries  that  may  result,  perhaps 
on  the  ground  that  the  engineer,  as  a  participant  in  the  tortious  act,  in- 
volved his  master. 

Legal  Duty  of  Employer.  Where,  by  statute,  under  the  Common  Law 
or  otherwise,  a  person  has  a  duty  imposed  upon  him  and  the  execution  of 
the  work  brings  such  a  duty  into  action,  the  use  of  an  independent  contrac- 
tor does  not  divest  him  of  the  duty.  The  proper  lighting  of  a  sewer  trench 
has  been  held  to  be  a  duty  upon  the  city  or  the  private  owner,  which  no 
arrangement  with  a  contractor  can  set  aside.  The  employment  of  an  in- 
competent contractor  or  the  furnishing  of  unsafe  appliances  by  the  employer 
also  leaves  the  employer  liable. 

Rights  of  Third  Parties.  An  agreement  by  the  contractor  to  assume  all 
liability  is  effective  to  protect  the  employer  eventually,  but  it  does  not 
destroy  the  right  of  a  third  party  to  bring  his  suit  against  the  employer ; 
the  employer  may  recoup  himself,  and  the  bond  usually  required  should 
provide  proper  security  for  this  purpose. 

Statute  Liability.    In  some  States,  a  statute  provides  that  the  employer 


AGENCY.     MASTER  AND  SERVANT  8-19 

is  liable  for  injuries  to  employees  of  the  independent  contractor  due  to 
defects  in  ways,  works,  machinery,  plant,  or  tools,  furnished  by  the  em- 
ployer or  for  whose  use  he  is  responsible.  Such  a  provision  occurs  in  the 
Workmen's  Compensation  Act  of  at  least  one  State.  The  Common  Law 
may  in  some  cases  hold  him  equally  responsible  without  such  a  statute. 

GENERAL  STATUTE  REQUIREMENTS  FOR  EMPLOYERS 

To  Secure  Health  and  Safety.  There  are  other  statute  laws  in  many 
States,  affecting  manufacturing  and  other  establishments,  for  the  purpose 
of  better  protecting  the  safety  or  health  of  employees ;  for  guarding  danger- 
ous machinery ;  for  inspecting  elevators  and  steam  boilers ;  for  prescribing 
fire  protection  and  means  of  escape;  for  improving  sanitary  conditions; 
for  regulating  work  in  tenements ;  for  fixing  maximum  hours  for  work  for 
women  and  children;  and  for  many  other  purposes. 

To  secure  greater  safety  in  railroad  operation  there  are  requirements 
with  relation  to  signals,  brakes,  couplers,  clearances,  frogs  and  guard 
rails,  hours  of  service,  number  of  crew  on  trains,  and  many  others. 

The  statutes  of  each  State  must  be  examined  and  also  the  statutes  of 
the  United  States,  which  in  the  case  of  railroads  exercise  important  powers 
of  regulation  for  safety  under  the  so-called  Interstate  Commerce  Act. 

BAILMENTS 

Definition.  There  seems  to  be  some  necessity  for  differentiating  bail- 
ments from  agency.  Bailment  occurs  when  personal  property  is  trans- 
ferred temporarily  for  some  special  purpose  without  transfer  of  title  and 
with  little  or  no  authority  vested  in  the  bailee  other  than  to  care  for  the 
property. 

Classification.  Bailments  are  of  two  general  classes:  I.  Gratuitous 
bailments,  for  the  benefit  of  one  of  the  parties  to  the  bailment.  II.  Bail- 
ments upon  consideration,  for  the  mutual  benefit  of  the  parties. 

In  class  I,  they  may  be  for  the  benefit  of  the  bailor,  where  the  property 
is  gratuitously  kept  or  carried,  or  worked  upon ;  or  they  may  be  for  the 
benefit  of  the  bailee,  when  the  thing  is  lent  to  him.  In  class  II,  they  are 
pledges,  as  security  for  performing  some  obligation,  for  payment  of  a  debt, 
or  in  contracts  of  hiring.  There  are  four  cases  of  hiring :  the  bailor  may 
hire  the  bailee  to  do  work  on  something ;  or  to  take  custody  of  it  (store 
it) ;  or  to  carry  it  from  place  to  place ;  or  the  bailee  may  hire  from  the 
bailor. 

Consideration.  As  to  consideration,  which  seems  necessary  under  the 
law  of  contracts,  in  bailments  for  mutual  benefit  it  is  directly  evident ;  in 
gratuitous  bailments  the  deprivation  of  possession  is  evidently  a  detriment 


8-20  AGENCY.     MASTER  AND  SERVANT 

to  the  bailor,  which  constitutes  a  sufficient  consideration,  while  the  view- 
point of  the  law  seems  somewhat  stretched  in  holding  that  "  the  owner's 
trusting  him  with  the  goods  is  a  sufficient  consideration  to  oblige  him  to  a 
careful  management."  The  doctrine  comes  from  the  Civil  Law ;  and  the 
Common  Law,  from  necessity  apparently,  finds  means  to  harmonize  it. 
Bailments  occurring  through  the  action  of  law,  and  some  others,  may  exist 
without  the  mutual  assent  of  the  parties ;  here  again  the  law  of  contracts 
seems  not  altogether  applicable. 

Delivery.  For  a  bailment  to  occur,  delivery  and  acceptance  of  the 
property  are  necessary,  but  these  may  be  constructive  instead  of  actual, 
or  may  come  about  by  operation  of  law.  A  seller  who  holds  goods  after  a 
sale  (not  a  contract  to  sell)  does  so  as  bailee.  Constructive  delivery  may 
occur  where  manual  delivery  is  impossible.  An  officer  holding  goods  under 
legal  process  is  a  bailee.  Being  in  possession,  the  bailee  may  exercise  rights 
against  any  third  party  but  may  not  dispute  the  bailor's  title. 

Care.  An  important  feature  is  the  care  demanded  of  the  bailee.  At 
one  time  the  terms  "  slight,"  "  ordinary,"  and  "  great  "  diligence  were 
used,  depending  upon  the  apparent  advantage  to  the  bailee ;  but  the  better 
rule  now  seems  to  be  that  the  bailee  must  exercise  reasonable  care  "  under 
the  circumstances  of  the  case,"  somewhat  analogous  to  the  rule  as  to 
negligence.  The  care  and  responsibility  may  be  fixed  by  specific  agree- 
ment. The  bailee  must  in  any  case  act  in  good  faith  and  must  return  the 
property  to  the  bailor  at  the  termination  of  the  bailment,  which  may 
occur  by  the  act  of  the  parties  or  by  operation  of  law.  The  place  of  delivery 
ordinarily  is  the  place  where  the  goods  have  been  kept.  The  bailment  may 
sometimes  be  at  the  option  of  the  bailor ;  it  may  be  terminated  by  full 
performance,  or  by  mutual  agreement ;  the  termination  may  come  about 
by  the  death  of  one  of  the  parties,  or  by  a  change  in  their  legal  status,  or 
by  destruction  of  the  property. 


CHAPTER  IX 

SALES 

Definition.  The  term  "  sales  "  is  in  common  use,  in  a  technical  sense, 
to  cover  sales  of  personal  property.  Where  an  agreement  is  made  for 
the  transfer  of  personal  property  from  one  party  to  another,  the  transaction 
may  be  a  "  sale  " ;  it  may  be  only  a  "  contract  to  sell  " ;  or  it  may  be  a 
"  contract  for  labor  and  materials."  The  distinction  is  in  many  cases 
important.  In  the  practical  working  of  the  Common  Law,  it  has  come 
about,  with  respect  to  sales  or  contracts  to  sell,  that  the  law  in  different 
States  varies  appreciably.  This  may  have  been  due  to  different  business 
customs  in  different  places,  to  a  different  point  of  view  of  the  various  courts 
as  to  what  was  right  and  just  when  the  law  took  form,  or  in  part  to  both 
causes.  Whatever  the  explanation,  the  fact  of  difference  is  undisputed  and 
is  a  serious  handicap  to  the  proper  conduct  of  business. 

Uniform  Sales  Act.  Recently  an  important  effort  to  improve  the  situa- 
tion has  resulted  in  what  is  known  as  "  The  Uniform  Sales  Act  "  prepared 
for  the  purpose  of  securing  uniformity  of  law  in  the  various  States.  In 
1913  it  had  been  adopted  in  nine  States,  and  in  1917  in  twelve  or  more. 

The  following  definitions  are  there  given: 

"A  contract  to  sell  goods  is  a  contract  whereby  the  seller  agrees  to  transfer  the 
property  in  goods  to  the  buyer  for  a  consideration  called  the  price. 

"A  sale  of  goods  is  an  agreement  whereby  the  seller  transfers  the  property  in 
goods  to  the  buyer  for  a  consideration  called  the  price." 

Distinction  between  Sales  and  Contracts  to  Sell.  The  important  differ- 
ence between  a  sale  and  a  contract  to  sell  is  here  outlined ;  it  lies  in  the 
effect.  A  sale  is  substantially  a  conveyance ;  the  buyer  acquires  title  and 
the  right  to  possession  of  the  specific  goods,  sometimes  even  in  the  hands  of 
a  third  party,  and  any  subsequent  gain,  or  loss,  or  risk,  is  the  buyer's. 

With  a  contract  to  sell,  the  buyer  does  not  acquire  the  right  to  the 
specific  goods ;  his  remedy  against  the  seller  for  non-delivery  or  non-com- 
pliance with  the  contract  is  confined  to  a  suit  for  money  damages  in  a  court 
of  Law ;  the  risk  is  the  seller's  unless  otherwise  fixed  by  specific  agreement. 
In  some  cases  the  right  to  the  goods  is  the  most  important  consideration ; 

9-1 


9-2  SALES 

in  others,  the  risk  is  primarily  to  be  considered  and  a  contract  to  sell  may 
be  more  to  the  buyer's  advantage. 

The  terms  "  bargain  and  sale  "  and  "  contract  for  future  sale  "  are 
sometimes  used  instead  of  "  sale  "  and  "  contract  for  sale.7' 

Labor  and  Materials.  It  is  sometimes  difficult  to  distinguish  between 
contracts  to  sell  or  perhaps  from  sales  on  the  one  hand,  and  contracts  for 
labor  and  materials  on  the  other.  The  rule  or  standard  by  which  to  dis- 
tinguish between  them  differs  in  different  States.  In  this  connection, 
immediate  delivery  was  at  one  time  considered  essential  for  a  sale  but  is 
no  longer  insisted  on.  One  rule  provides  that  it  is  not  a  sale  or  a  contract 
to  sell  if  the  use  of  labor  in  producing  is  a  part  of  the  consideration ;  an- 
other insists  that  where  material  to  be  worked  upon  is  the  seller's,  he  is 
working  for  himself  and  not  for  the  buyer,  and  that  it  is  a  contract  to  sell  or 
a  sale ;  another  takes  the  view  that  where  the  material  is  in  form  requiring 
work  before  delivery,  it  is  a  contract  for  labor  and  materials ;  another  test 
rests  upon  the  question  whether  the  labor  is  the  essential  ingredient ;  still 
another  which  has  found  favor  in  several  jurisdictions,  looks  to  see  whether 
the  article  ordered  is  such  as  the  seller  produces  for  the  market  in  the  ordi- 
nary course  of  business,  or  whether  he  has  taken  a  special  order  for  it.  To 
distinguish  correctly,  one  must  know  the  law  of  the  State  in  which  the 
transaction  occurs,  and  much  of  this  is  Common  Law  to  be  hunted  out  from 
the  decisions  of  the  courts.  No  general  rule  for  guidance  can  be  laid  down 
here,  however  desirable  it  may  seem.  An  important  feature  involved  is 
that  the  Statute  of  Frauds  has  no  application  in  the  case  of  labor  and 
materials,  while  it  does  apply  to  contracts  to  sell. 

Basis  is  Contract.  Whether  a  transaction  is  a  sale,  a  contract  to  sell,  or 
a  contract  for  labor  and  materials,  the  basis  is  that  of  contract.  A  sale 
is  sometimes  called  an  "  executed  "  contract,  but  valid  objection  to  this 
is  made  that  in  case  of  a  sale  there  are  often  things  yet  to  be  done,  such 
as  delivery  by  the  seller  or  payment  by  the  buyer. 

At  the  outset  four  important  questions  arise :  first,  has  there  been  any 
contract?  second,  if  so,  was  there  a  sale?  third,  was  there  merely  a  contract 
to  sell?  fourth,  was  the  contract  for  labor  and  materials? 

Contract  Essentials.  If  there  was  no  contract,  the  matter  ends  there. 
It  should  be  remembered  that  for  a  contract  to  exist,  the  four  essentials 
are  necessary;  mutual  assent,  competent  parties,  consideration,  definite 
and  lawful  subject  matter.  It  should  further  be  borne  in  mind  that  the 
Statute  of  Frauds  requires  that  certain  contracts  shall  be  in  writing,  with- 
out which  they  are  unenforceable  and  might  as  well  not  exist. 

Involuntary  Sale.  While  a  sale,  as  a  contract,  requires  mutual  assent 
to  its  terms,  what  has  been  called  an  involuntary  sale  sometimes  occurs 
where  a  court  grants  money  damages  for  goods  taken  away  from  a  person 


SALES  9-3 

in  some  way  (the  goods  not  being  returned).  Here  an  agreement  to  pay 
is  apparently  implied ;  the  doctrine  differs  little  if  any  from  that  of  implied 
contract  referred  to  in  a  previous  chapter. 

Important  Features.  Many  interesting  points  are  involved  in  the  law 
of  sales.  Among  these  are  possession,  title,  delivery,  receipt,  and  accept- 
ance ;  the  rights,  duties,  and  remedies  of  the  parties  and  of  third  persons ; 
and  the  risk  which  is  a  matter  of  importance  to  be  considered. 

Sale  or  Contract  to  Sell.  In  general,  the  seller  passes,  or  engages  to 
pass,  the  general  property  in  a  thing  and  to  deliver  possession  for  a  price 
paid.  Payment  and  giving  of  possession  may  take  place  at  the  same  time 
or  at  different  times.  Whether  the  transaction  in  a  given  case  is  a  sale 
or  merely  a  contract  to  sell,  is  not  always  easy  to  determine. 

When  two  persons  negotiate  and  agree  and  the  price  is  paid,  delivery 
is  made,  and  receipt  and  acceptance  are  accomplished,  the  case  is  clear; 
a  sale  is  effected.  When  the  price  is  not  paid,  and  actual  possession  is  not 
at  once  secured,  the  case  is  less  simple ;  where  the  terms  are  clear,  no  diffi- 
culty results ;  but  where  inferences  need  to  be  made  as  to  time  of  perform- 
ance or  otherwise,  even  judges  have  not  always  been  sound  in  their  opinions. 
A  contract  for  future  delivery  may  sometimes  be  a  sale  rather  than  a  contract 
to  sell ;  the  law  looks  beyond  the  mere  language  to  distinguish  between  a 
present  sale  and  a  contract  for  future  sale ;  the  intent,  however  determined, 
controls.  The  courts  of  some  States,  however,  refuse  to  recognize  a  pres- 
ent sale  when  delivery  and  payment  are  to  take  place  in  future. 

Ordinary  Rule.  The  rule  ordinarily  is  that  a  sale  is  confined  to  ascer- 
tained, existing  goods,  the  property  of  the  seller,  title  to  which  may  pass 
at  once ;  but  for  goods  not  in  existence,  or  to  be  ascertained,  or  to  be  ac- 
quired or  manufactured  by  the  seller,  the  transaction  commonly  is  a  con- 
tract to  sell.  Natural  products  or  expected  increase,  as  offspring  of  animals, 
future  crops  of  land,  wages  to  be  earned  under  an  existing  contract,  or  a 
mortgage  resulting  from  an  existing  contract,  however,  may  be  the  subject 
of  a  present  sale ;  the  title  is  potential,  ripening  into  actual  on  the  occur- 
rence of  the  contemplated  result.  It  is  a  sale  to  the  extent  that  a  later 
sale  to  a  third  party  will  be  set  aside. 

Specific  Goods.  An  agreement  for  the  sale  of  specific  goods  is  prima 
fade  a  sale,  vesting  title  in  the  buyer  and  the  right  to  the  price  in  the  seller, 
although  future  delivery  is  provided  for  as  to  time  or  place.  When,  how- 
ever, the  seller  engages  to  do  something  further  to  put  the  goods  into 
deliverable  state,  the  presumption  is  that  passing  of  title  is  to  be  postponed ; 
in  this  case  notice  to  the  buyer  of  readiness  for  delivery  seems  to  be  required 
in  some  States  and  not  in  others,  and  a  specific  agreement  as  to  this  seems 
desirable  at  the  time  when  the  transaction  is  entered  upon. 

Immediate  Delivery.    On  the  other  hand,  there  may  be  only  a  contract 


9-4:  SALES 

to  sell  (rather  than  a  sale)  where  goods  are  subject  to  immediate  delivery ; 
the  question  involved  is  whether  title  passes  before  delivery.  The  intent 
should  in  some  way  be  made  clear;  and  the  opportunity  for  misunder- 
standing as  to  an  oral  agreement  makes  it  desirable  that  there  should  be 
some  writing  to  make  clear  what  is  intended ;  the  interchange  of  letters 
in  general  business  procedure  serves  not  only  to  constitute  a  valid  contract, 
but  also  to  clearly  define  its  terms ;  for  instance,  whether  a  sale  or  a  con- 
tract to  sell  is  intended. 

Ascertained  Goods.  For  a  sale  to  occur,  the  goods  must  not  only  exist, 
but  must  be  specific  or  ascertained,  or  definitely  ascertainable.  An  agree- 
ment to  sell  and  to  buy  a  cow  from  a  herd  is  not  sufficient ;  some  means 
must  be  provided  to  determine  which  cow ;  the  cow  "  which  the  buyer  shall 
select,"  however,  is  ascertainable. 

Weighing,  Measuring,  Testing.  Where  weighing,  or  measuring,  or 
testing  is  necessary  to  determine  the  price,  or  to  identify  or  make  certain 
the  goods,  the  reasonable  rule  appears  to  be  that  there  is  no  present  sale 
and  title  does  not  pass  until  this  is  done  and  notice  is  given  to  the  buyer. 
The  seller  then  is  impelled  to  prompt  action  in  order  to  transfer  the  risk. 
The  rule,  however,  is  variable  in  the  different  States ;  the  Uniform  Sales 
Act  regards  the  transaction  as  a  sale.  Weighing,  when  necessary,  is  suffi- 
cient even  though  computation  may  be  further  required. 

In  some  States,  if  the  goods  are  destroyed  by  fire  or  otherwise  before 
weighing,  the  seller  bears  the  loss ;  there  has  been  no  price  fixed.  In  other 
States,  the  more  general  rule  prevails  that,  where  title  has  passed  except 
for  measuring,  the  buyer  bears  the  loss  for  an  amount  to  be  determined  as 
nearly  as  possible  by  other  means. 

Designated  Quantity.  When  an  agreement  is  made  to  give  and  to  take 
a  designated  quantity  from  a  mass  of  uniform  kind  and  quality,  in  the 
United  States  with  the  exception  of  a  few  States,  there  is  a  sale ;  in  England, 
not.  The  Uniform  Sales  Act  regards  it  as  a  sale.  This  appears  to  be  good 
law ;  the  buyer  surely  gets  what  he  wanted  and  agreed  to  take ;  no  selection 
or  discretion  could  bring  about  a  different  result.  In  the  case  of  grain 
elevators,  it  is  the  accepted  custom  that  an  owner  deposits  a  certain  amount 
of  grain,  is  given  a  warehouseman's  receipt  which  he  sells,  and  the  purchaser 
later  receives  the  specified  amount  of  grain  although  the  entire  contents 
of  the  elevator  may  have  changed  more  than  once  during  the  interval. 
There  has  been  a  sale  in  this  case. 

Known  Quality.  Where  goods  ordered  are  not  a  specific  article,  they 
must  nevertheless  be  such  goods  as  the  buyer  ordered  and  as  the  seller 
agreed  to  deliver.  There  must,  however,  be  mutual  assent ;  there  must 
be  an  appropriation  by  the  seller  of  the  articles  contracted  for,  and  this 
must  have  the  assent  of  the  buyer.  Often,  in  the  course  of  business,  this 


SALES      .  9-5 

assent  may  have  been  given  prior  to  the  appropriation ;  in  ordering  goods 
whose  quality  and  character  are  known  to  the  buyer,  such  assent  is  already 
given.  Until  the  seller  has  set  aside  or  appropriated  the  goods  to  the  buyer, 
there  is,  however,  no  sale.  A  withdrawal  of  assent  before  appropriation  will 
prevent  a  sale,  although  the  seller  may  have  a  case  against  the  buyer  for 
breach  of  contract. 

Future  Goods.  For  unascertained  or  future  goods,  the  buyer  does  not 
secure  or  assume  title  until  after  approval  or  acceptance,  perhaps  delivery. 
The  goods  must  be  goods  agreed  upon,  in  some  cases  a  rather  specific  article ; 
in  orders  for  one  of  a  specific  class,  the  intent  of  the  purchase  must  be 
covered.  Where  the  order  is  filled  according  to  agreement  the  buyer  has 
already  assented ;  this  is  implied. 

Sale  on  Performance.  A  contract  to  sell  may  become  a  sale  upon 
the  performance  of  certain  acts.  A  contract  to  sell  on  approval  is  not  a 
present  sale ;  but  if  goods  not  approved  are  held  somewhat  unduly,  some 
States  hold  that  the  title  has  passed  under  implied  approval.  In  some 
States,  however,  the  contrary  view  prevails.  Goods  sent  "  for  sale  and 
return  "  are  in  this  country  at  the  buyer's  risk,  while  the  return,  if  made, 
must  be  within  a  reasonable  time ;  otherwise  it  becomes  a  sale. 

Cash  Sales.  In  many  States,  in  the  case  of  "  cash  sales,"  the  buyer 
is  not  entitled  to  possession  without  payment  of  cash,  and  where  no  time 
is  agreed  on  for  payment,  delivery  and  payment  are  held  to  be  concurrent 
acts,  and  the  seller  may  refuse  to  deliver  without  payment,  and  unless 
payment  is  immediate  the  contract  becomes  void.  The  law  is  variable, 
however,  in  different  States.  In  most  States  a  contract  for  the  sale  of 
specific  goods  for  cash  is  a  present  sale  unless  general  custom  or  custom 
between  the  parties  indicates  otherwise. 

Conditions.  Both  contracts  to  sell  and  sales  may  be, made  subject  to 
conditions ;  these  conditions  may  be  expressly  agreed  upon,  or  they  may  be 
implied,  as  in  other  contracts.  It  is  very  common  to  make  sales  and  to 
give  possession  even  though  title  is  retained  by  the  seller  until  payment  of 
the  price  is  made ;  sometimes  this  condition  is  expressed,  sometimes  implied. 
The  term  "  conditional  sales  "  is  commonly  applied  to  such  sales,  special 
reference  to  which  will  be  made  later.  Purchases  C.O.D.  in  most  jurisdic- 
tions appropriate  goods  to  the  contract,  the  title  passing  subject  to  pay- 
ment on  delivery.  In  the  case  of  F.O.B.  sales,  title  passes  when  delivery 
F.O.B.  is  accomplished.  Where  delivery  at  a  particular  place  is  specified, 
delivery  at  that  place  is  perhaps  the  essence  of  the  contract,  and  before 
delivery  there  is  only  a  contract  to  sell. 

Right  of  Disposal  Reserved.  With  a  contract  to  sell,  the  seller  may 
reserve  the  right  of  disposal  of  the  goods  until  conditions  are  fulfilled ;  for 
instance  until  the  purchase  price  is  paid,  even  if  the  goods  have  been 


9—6  SALES 

delivered.  Sometimes,  in  this  case,  under  unusual  circumstances,  the  seller 
may  impose  a  new  condition ;  this,  however,  he  does  at  his  peril,  at  the  peril 
of  suit  for  breach  of  contract.  Sometimes  he  ships  goods  under  a  bill  of 
lading  deliverable  to  himself,  or  agent,  or  order;  sometimes,  even  when 
deliverable  to  buyer,  the  bill  of  lading  is  retained  by  seller  until  payment  is 
made;  or  the  bill  of  lading  has  a  bill  of  exchange  or  draft  for  the  price 
attached  and  is  sent  to  an  agent  or  a  bank  for  presentation  or  collection. 
In  this  case  the  buyer  does  not  secure  title  until  he  pays  cash  or  accepts 
the  bill  or  draft  (whichever  is  required)  unless  in  some  way  a  contrary  intent 
appears.  It  should  be  borne  in  mind  that  the  point  involved  is  the  right 
to  possession ;  although  the  buyer  may  be  entitled  to  damages  for  breach 
of  contract,  yet,  unless  title  has  passed,  a  third  party  buying  from  the 
seller  will  acquire  title  and  be  secure  in  it  in  the  absence  of  fraud  on  his 
part,  while  a  third  party  who  purchases  from  the  buyer  may  be  deprived 
of  the  goods. 

Perished  Goods.  Where  goods  have  perished  before  the  agreement  was 
made,  there  is  no  contract,  no  sale;  where  part  only  have  perished  or 
deteriorated  before  the  agreement,  the  buyer  is  allowed  to  exercise  an  op- 
tion, either  to  hold  the  contract  void,  or  to  pay  for  so  much  as  is  trans- 
ferred at  the  agreed  rate  of  price  if  divisible,  or  the  full  price  if  not  divisible. 
In  some  cases  where  the  full  price  would  be  out  of  the  question,  the  buyer 
might  dicker  with  the  seller,  and  to  better  advantage  before  deciding  to  hold 
the  agreement  void.  Any  resulting  agreement  should  constitute  a  new 
contract  and  be  clear  in  its  terms. 

Choses  in  Action.  While  the  word  "  goods  "  is  ordinarily  interpreted 
as  the  equivalent  of  the  English  term  "  goods,  wares,  and  merchandises," 
there  is  a  tendency  in  the  United  States  to  extend  it  to  other  kinds  of  per- 
sonal property,  what  lawyers  call  "  choses  in  action  "  being  sometimes  speci- 
fied ;  under  this  designation  are  included  promissory  notes,  bills  of  exchange, 
debts,  policies  of  insurance,  and  claims  under  which  a  suit  might  be  brought. 
The  rule  common  in  many  States  is  that  accounts  or  other  things  not 
strictly  deliverable  are  not  subject  to  sale ;  there  is  divergence  of  law  upon 
this  point,  however,  in  the  different  States.  Money,  particularly  in  forms 
specially  in  demand,  will  often  be  considered  goods ;  ordinary,  current  forms 
of  money,  usually  not.  The  Uniform  Sales  Act  excludes  money  as  "  goods." 
In  Virginia,  in  1910,  a  case  occurred  in  which  it  was  held  that  where  elec- 
tricity was  delivered  into  the  wires  of  the  consumer,  title  passed  and  a  sale 
resulted. 

Property  Connected  with  Land.  While  the  law  of  sales  deals  only  with 
personal  property,  it  should  be  borne  in  mind  that  some  articles  con- 
nected with  real  property  are  held  to  be  personal  property  or  goods.  The 
products  of  a  mine  when  later  severed,  ice  when  later  formed  on  a  pond, 


SALES  9-7 

crops  when  harvested,  or  trees  when  they  have  been  cut,  are  personal 
property  or  goods,  and  are  readily  subject  to  a  contract  to  sell,  perhaps  to 
a  sale.  Fixtures  in  a  house,  or  even  buildings  to  be  removed  and  delivered 
to  the  buyer,  or  removed  by  him,  are  also  personal  property. 

Price.  For  a  sale  the  price  commonly  is  in  money,  and  in  some  States 
this  is  essential ;  in  others  it  may  be  in  any  personal  property ;  the  Uni- 
form Sales  Act  says  "  in  any  personal  property."  The  discharge  of  an 
existing  indebtedness  is  sufficient.  The  price  need  not  be  directly  stipu- 
lated ;  if  it  is  capable  of  determination  it  is  sufficient.  This  determination 
may  be  dependent  upon  some  future  event,  as  on  the  verdict  of  a  jury, 
or  on  the  valuation  of  a  third  person.  A  custom  in  general  use  or  well 
maintained  between  the  parties  may,  for  instance,  establish  the  market 
price  as  the  sale  price ;  or  the  custom  between  them  may  imply  a  reason- 
able price,  which  in  many  cases  will  resolve  itself  into  the  market  price.  If 
the  price  be  finally  determinable  and  certain,  it  suffices. 

STATUTE  OF  FRAUDS 

Statute  of  Frauds.  One  section  of  the  English  Statute  of  Frauds  pro- 
vides that  "  no  contract  for  the  sale  of  any  goods,  wares,  or  merchandise 
for  the  price  of  £10  or  upwards  shall  be  allowed  to  be  good,  except  the  buyer 
shall  accept  part  of  the  goods  so  sold,  and  actually  receive  the  same,  or 
give  something  in  earnest  to  bind  the  bargain,  or  in  part  payment,  or  that 
some  note  or  memorandum  in  writing  of  the  said  bargain  be  made  and 
signed  by  the  parties  to  be  charged  by  said  contract,  or  their  agents  there- 
unto lawfully  authorized." 

Acts  in  substantial  accord  have  been  passed  by  all  or  nearly  all  of  the 
States,  but  instead  of  £10,  various  sums  have  been  specified :  $40,  $50, 
$100,  and  even  $2500  are  actual  figures.  Apparently  the  view  has  pre- 
vailed in  some  States,  that  under  modern  conditions,  business  is  better 
served  by  fixing  a  higher  limit  than  $50,  and  $500  is  now  not  uncommon 
as  the  price  fixed. 

Not  Enforceable.  The  Uniform  Sales  Act  uses  the  words  "  shall  not 
be  enforceable  "  ;  the  sale  or  contract  to  sell  is  thus  not  illegal ;  it  doubtless 
may  be  morally  binding;  the  courts,  however,  in  view  of  this  statute, 
cannot  give  time  to  consider  it. 

Several  Articles.  Where  several  articles  are  bought  at  one  time,  is  the 
transaction  one  sale  or  several  sales  ?  The  answer  often  determines  whether 
the  price  is  large  enough  so  that  the  Statute  of  Frauds  applies.  Where  the 
sale  is  per  unit,  whether  bushels  of  wheat,  or  a  consignment  of  shovels,  or 
wheelbarrows,  or  wagons,  the  case  seems  clear;  with  a  bill  of  goods  of 
various  sorts  ordered  at  one  time  and  to  be  delivered  together,  it  seems  less 


9-8  SALES 

clear ;  but  the  nature  of  the  transaction,  the  business  custom  between  the 
parties,  or  the  intent,  may  often  readily  indicate  a  single  sale  or  contract 
to  sell.  Where  a  man  ordered  goods  in  part  for  his  home,  part  for  his  farm, 
part  for  his  place  of  mercantile  business,  the  sales  would  probably  be  held 
to  be  separate. 

Form  of  Memorandum.  As  to  the  memorandum  in  writing  to  bind  the 
person  charged,  a  letter,  receipt,  invoice,  statement  of  account,  entry  in 
books,  or  memorandum  of  almost  any  kind  will  suffice.  It  must  be  suffi- 
ciently certain  to  indicate  the  transaction,  including  parties  and  the  price, 
if  any,  agreed  upon.  It  must  be  signed  in  some  way,  by  initials,  mark, 
code  sign,  rubber  stamp,  sometimes  by  print.  The  signature  may  be  that 
of  principal  or  agent,  and  in  auction  sales  the  auctioneer  is  recognized 
as  the  agent  of  both  parties. 

Part  Performance.  Part  payment,  or  both  receipt  and  acceptance  of 
part  of  the  goods,  make  a  writing  unnecessary.  Receipt  and  acceptance 
are  by  no  means  synonymous.  Following  a  transaction,  if  goods  are 
delivered  at  a  specified  place  or  to  a  designated  person,  ordinarily  the 
goods  are  delivered  by  the  seller  and  received  by  the  buyer.  The  receipt 
of  a  bill  of  lading  or  other  document  of  title  may  serve  the  purpose  of  re- 
ceipt of  the  goods  just  as  the  delivery  of  the  deed  of  real  property  serves  as 
delivery  of  the  property.  A  common  carrier  may  be  and  often  is  the  agent 
of  the  buyer  to  receive  goods,  but  he  has  no  power  to  accept. 

Acceptance.  Acceptance  of  the  goods  is  required,  not  merely  of  the 
offer ;  and  this  may  occur  before,  after,  or  in  connection  with  the  receipt. 
Goods  may  be  accepted  while  in  the  hands  of  the  seller  at  the  time  of 
bargaining,  and  receipt  be  a  further  requisite ;  inspection  may  be  necessary 
or  allowable,  and  approval  may  thus  come  later  than  receipt ;  on  the  other 
hand,  the  whole  transaction  may  be  concluded  at  the  time  of  negotiation, 
and  removal  by  the  buyer  be  the  only  duty  to  be  performed.  Some 
definite  act  of  approval  is  often  necessary,  and  may  be  sufficient;  any 
dealing  with  the  goods,  as  re-selling,  implies  acceptance. 

Both  receipt  and  acceptance  are  questions  of  fact  for  the  jury  to  deter- 
mine and  the  burden  of  proof  of  acceptance  is  on  the  seller. 

DUTIES  OF  SELLER 

Title  and  Possession.  It  is  the  duty  of  the  seller,  ordinarily,  to  confer 
title  and  give  possession,  unencumbered  title  and  quiet  possession;  but 
not  when  there  was  an  intent  otherwise,  perhaps  by  express  exemption; 
and  not  in  the  case  of  administrators,  executors,  and  trustees  who  are  not 
expected  to  warrant  title.  There  are  sometimes  conditions  which  go  to 
the  whole  consideration,  the  essential  terms  of  the  contract,  and  where 


SALES  9-9 

non-fulfilment  brings  liability  on  neither  party.  An  example  is  where  goods 
are  to  arrive  in  a  certain  vessel  which  does  not  arrive ;  or  when  appraisal  or 
approval  is  to  be  made  by  a  designated  party  who  refuses  or  neglects  to 
act ;  or  perhaps  where  goods  are  to  be  satisfactory  to  buyer.  In  the  last 
case  some  courts  uphold  such  a  provision,  others  not. 

Specific  Article  Furnished.  When  there  is  a  sale  of  a  specific  article, 
this  must  be  furnished ;  but  where  each  has  opportunity  to  see  and  judge, 
delivery  and  title  to  a  specific  thing  agreed  to  is  enough,  although  it  was 
not  the  article  the  buyer  thought  it  was. 

Ordinarily,  the  remedy  for  a  breach  of  contract  on  the  part  of  the 
seller  is  a  suit  at  Law  for  damages ;  a  suit  in  Equity  will  be  allowable  only 
when  a  specific  article  may  properly  be  held  essential,  and  where  money 
damages  are  inadequate. 

Specific  Characteristics.  When  there  is  an  agreement  to  furnish  an 
article  with  specified  characteristics,  that  must  be  furnished,  and  this 
applies  to  contracts  to  sell  as  well  as  to  sales.  A  sale  of  goods  with  specified 
characteristics,  or  description  "  with  all  its  faults  "  is  not  fulfilled  unless 
those  characteristics  are  present,  but  is  fulfilled  if  they  are  present,  although 
the  goods  are  imperfect  in  some  way;  defects  of  quality  are  "faults," 
those  of  design  bring  liability  upon  the  seller. 

When  the  sale  is  by  description  and  sample,  the  purpose  may  be  to  fix 
quality,  or  design  and  fitness ;  the  determination  of  fact  as  to  which  was 
the  purpose  may  often  be  difficult.  Explicit  understanding  in  advance 
will  prevent  controversies. 

Suitable  for  Purpose.  When  an  article  is  to  be  suitable  for  a  given 
purpose,  the  essential  feature  may  be  implied,  and  not  in  all  cases  expressly 
stated ;  the  seller  must,  however,  in  some  way  know  the  requirement  and 
purpose.  In  buying,  reliance  is  often  placed  upon  the  skill  and  judgment 
of  the  seller,  especially  when  there  is  no  opportunity  for  preliminary  in- 
spection. The  skill  and  judgment  of  a  manufacturer  may  be  relied  upon, 
however,  only  for  defects  which  might  have  been  detected ;  for  latent 
defects,  the  manufacturer  or  dealer  generally  is  not  responsible.  When  a 
buyer  specifies  a  particular  article  under  its  trade  name,  there  is  no  engage- 
ment as  to  its  fitness  for  some  special  purpose ;  nor  is  there  when  the  buyer 
specifies  materials  and  methods. 

The  goods  must  also  be  in  salable  and  merchantable  condition,  at  least 
for  shipment  and  perhaps  when  delivered.  Provisions  must  be  fit  to  eat 
as  food,  and  statutes  or  ordinances  often  regulate  this. 

Quantity.  Quantity  may  be  of  the  essence  of  a  sale,  and  a  less  amount 
rejected ;  a  larger  amount  also,  except  that  a  moderate  excess  to  secure 
compliance  may  be  reasonable  if  no  extra  charge  is  made ;  the  intent  con- 
trols. When  "  about "  qualifies  quantity,  a  reasonable  variation  only  is 


9-10  SALES 

allowable.  Partial  delivery  under  an  entire  contract  does  not  satisfy  the 
seller's  obligation. 

When  a  specific  lot  is  sold,  estimated  in  quantity,  the  lot  is  the  essence, 
the  quantity  subordinate.  A  cargo  of  any  specified  vessel  is  a  full  cargo ; 
without  specification  of  size  or  quantity,  the  full  cargo  of  a  vessel  engaged 
in  that  particular  trade.  It  is  wise  in  such  transactions  to  specify  in  some 
way  the  amount  required,  approximately  at  least,  for  courts  commonly 
construe  such  a  sale  or  contract  to  comprise  the  entire  cargo. 

Goods  sold  must  not  be  mingled  with  other  goods  to  the  buyer's  dis- 
advantage, unless  according  to  custom  or  usage  between  the  same  seller 
and  buyer.  Inspection  may  sometimes  require  use ;  it  must  be  reasonable 
use  in  the  custom  of  the  trade.  Here  clearly  is  an  example  where  receipt 
may  not  be  equivalent  to  acceptance.  The  agreement  may,  or  may  not, 
require  acquisition  of  title  before  inspection ;  if  title  be  acquired,  the  remedy 
after  inspection  will  be  a  claim  for  damages. 

Delivery  of  Possession.  The  duty  of  the  seller  to  give  possession, 
whether  express  or  implied,  is  not  equivalent  to  agreement  to  send.  How 
the  seller  gives  possession  depends  on  circumstances  and  custom.  The 
place  of  giving  possession  is  often  the  seller's  place  of  business,  store,  fac- 
tory, farm,  or  mine ;  sometimes  the  place  will  be  expressly  agreed  upon ; 
sometimes  the  custom  of  the  trade  controls.  Where  there  is  transfer  of 
possession  without  change  of  location,  sometimes  a  vendor's  lien  attaches ; 
sometimes  the  seller  acts  as  bailee,  perhaps  being  paid  for  storage. 

In  some  cases  ordinary  delivery  is  impossible,  as  with  logs  in  a  boom. 
In  this  or  other  such  cases,  putting  goods  in  the  control  of  the  buyer 
suffices.  A  cargo  is  delivered  by  its  bill  of  lading ;  a  key  to  a  storehouse  is 
delivered  to  buyer ;  with  goods  in  a  public  place  where  locality  is  not  an 
element  of  possession,  any  act  of  delivery  satisfies.  In  the  case  of  bulky 
or  ponderous  goods,  where  the  seller  leaves  the  goods  to  be  removed  by 
the  buyer,  there  is  delivery  and  receipt. 

The  time  of  delivery  must  be  reasonable  both  as  to  date  and  hour  and 
may  be  expressly  fixed;  when  specified,  it  is  not  a  collateral  agreement, 
but  essential. 

Future  Payment  and  Delivery.  A  sale  may  be  made  where  both  future 
payment  and  future  delivery  are  agreed  upon ;  frequently  delivery  depends 
upon,  and  at  once  follows  payment.  The  time  of  payment  may  be  specified 
and  is  then  regarded  in  the  United  States  as  an  essential  term ;  this  is  the 
prevailing  rule.  It  is  often  arranged  that  payment  and  delivery  shall  be 
coincident. 

Sometimes  delivery  is  by  instalments;  in  such  case  failure  to  deliver 
the  first  instalment  constitutes  a  breach  and  gives  the  right  to  avoid  the 
contract ;  a  later  breach  gives  the  right  to  repudiate  the  unperformed  part ; 


SALES  9_11 

but  the  rule  as  to  this  varies  as  in  many  other  matters  touching  sales; 
a  failure  to  pay  promptly  for  an  instalment  may  sometimes  be  explained. 

Delivery  to  Carrier.  Where  the  seller  agrees  to  deliver  goods,  putting 
them  in  the  hands  of  a  carrier  does  not  effect  change  of  possession ;  but 
when  the  agreement  is  to  deliver  to  a  carrier,  the  latter  is  then  the  buyer's 
agent  to  receive  the  goods  and  delivery  to  the  carrier  is  sufficient.  If  a 
specific  carrier  is  designated,  delivery  must  be  to  him.  In  the  case  of 
delivery  F.O.B.  the  buyer  is  given  the  chance  to  specify  means  of  trans- 
portation. Goods  must  be  correctly  addressed,  and  properly  prepared  for 
transportation,  the  method  often  being  fixed  by  custom ;  the  seller  must 
comply  with  the  carrier's  regulations  in  the  interest  of  the  buyer.  In 
some  States,  the  seller  must  notify  the  buyer  of  readiness  for  shipment  to 
give  opportunity  to  insure;  in  some  States,  the  custom  between  dealers 
controls.  Delivery  to  a  warehouseman  follows  the  same  rule  as  with  car- 
riers. 

Title  Acquired  by  Buyer.  The  buyer  acquires  such  title  as  the  seller 
has,  but  nothing  more.  Except  by  action  of  law,  title  can  pass  only  by 
consent  of  the  true  owner  unless  the  latter  has  conferred  some  apparent 
right  on  the  seller.  An  innocent  third  party  who  buys  from  the  original 
buyer  in  good  faith  for  value,  will  be  protected  against  an  original  seller 
who  neglected  to  enforce  his  rights  against  the  original  buyer.  A  creditor 
receiving  goods  in  payment  for  a  debt,  however,  has  often  been  held  not  to 
be  a  purchaser  for  value,  but  the  rule  as  to  this  varies ;  the  same  is  true  of 
goods  held  as  collateral.  A  buyer  has  a  duty  to  exercise  some  diligence 
to  inquire  into  the  title  of  the  seller ;  fault  or  neglect  on  his  part  leaves  him 
subject  to  loss.  Simple  possession  without  apparent  authority  is  not 
enough  to  give  the  seller  the  right  to  sell. 

Notice  by  Seller.  In  the  case  of  "  conditional  sales,"  where  the  original 
seller  retains  complete  or  partial  title  to  an  article  sold  to  a  vendee,  as  we 
may  call  him,  the  laws  of  many  States  place  a  burden  upon  the  seller  to 
provide  suitable  notice  to  any  new  buyer.  The  new  buyer,  in  this  case, 
may  acquire  all  of  the  original  seller's  title  if  he  performs  all  of  the  conditions 
before  any  default  by  the  vendee. 

The  notice  required  of  the  seller  may  be  by  recording  the  contract  of 
conditional  sale,  or  by  filing  a  copy  in  a  specified  office ;  and  sometimes  a 
witness,  sometimes  an  acknowledgment,  is  required  before  the  contract 
will  be  recorded  or  filed.  The  requirements  are  so  conflicting  in  the 
various  States  that  the  advice  of  a  competent  attorney  conversant  with 
local  laws  and  customs  is  substantially  a  necessity  where  the  interests 
involved  are  important.  The  proprietor  of  a  patented  trench-digging 
machine  sells  to  a  contractor  of  moderate  financial  ability,  expecting  pay- 
ments from  the  profits  of  the  contract.  When  the  contract  is  finished  the 


9-12  SALES 

contractor  wishes  to  sell  the  machine.  The  new  buyer  ought  to  have 
reasonable  protection,  and  if  he  examines  the  records  for  recording  or 
filing,  has  exercised  reasonable  diligence.  The  proprietor,  the  original 
seller,  has  not  been  diligent  if  he  fails  to  record  or  file  his  contract  in  com- 
pliance with  local  requirements,  and  he  loses  his  right  to  the  machine. 

This  statement  appears  to  put  the  matter  right  morally.  The  law, 
however,  specifies  what  is  necessary  to  be  done,  and  in  some  States  makes 
it  criminal  to  unlawfully  dispose  of  goods  held  under  conditional  sales. 
Whether  he  be  seller  or  buyer,  the  engineer  or  engineering  contractor 
should  know  the  law  in  the  State  in  question.  In  some  States,  there  are 
"  Factor's  Acts  "  defining  the  legal  status  of  goods  in  the  hands  of  factors 
or  agents,  looking  to  the  protection  of  third  parties.  In  some  States, 
possession  is  sufficient  to  give  legal  title  against  another  in  similar  position 
without  title. 

WARRANTIES 

Character  of  Warranty.  An  important  subject  connected  with  sales 
is  that  of  "  warranty,"  which  is  differentiated  from  a  "  condition  "  in  that 
the  latter  goes  to  the  substance  of  the  contract  and  a  breach  vitiates  it, 
while  a  warranty  is  a  collateral  undertaking  or  stipulation  for  the  existence 
or  truth  of  some  fact  relating  to  the  thing  sold.  A  failure  or  breach  of  the 
warranty  does  not  void  the  sale ;  the  buyer  may  hold  the  goods,  and  the 
seller  have  the  right  to  the  purchase  money,  subject,  however,  to  the 
damages  to  which  the  buyer  is  entitled  for  the  breach  of  warranty. 

The  warranty  need  not  be  in  express  terms ;  in  determining  whether 
a  condition  or  a  warranty,  the  best  doctrine  appears  to  be  that  technical 
and  artificial  rules  shall  give  way  to  the  intent  of  the  parties  as  gathered 
from  the  contract,  although  this  rule  is  not  fully  accepted. 

Word  not  Essential.  The  word  "  warranty  "  is  not  essential ;  any 
statement  of  fact  which  the  buyer  relies  upon  as  a  material  inducement 
serves  the  purpose.  Statements  of  opinion,  or  puffing  statements  are 
held  not  to  be  statements  of  fact.  Statements  of  value  are  opinions; 
but  statements  of  selling  prices  are  facts.  Whether  a  sale  by  description 
involves  fact  or  opinion  is  held  one  way  by  some  courts,  differently  by 
others.  Whether  the  seller's  statement  of  fact  is  a  warranty,  depends  upon 
the  natural  effect  upon  the  mind  of  the  buyer;  if  the  seller  declines  to 
warrant,  he  saves  the  situation.  The  warranty  need  not,  however,  be  the 
sole  inducement  in  the  sale. 

Implied  Warranties.  Warranties  may  often  be  implied.  There  is 
an  implied  warranty  of  title,  and  engagement  that  the  goods  are,  or  that 
the  goods  when  and  if  delivered,  will  be  the  property  of  the  seller,  free 
from  encumbrance  in  favor  of  any  third  party,  unless  the  contrary  was 


SALES  9-13 

known  to  the  buyer  at  the  time  of  sale  or  of  contracting  to  sell ;  also  a 
guarantee  of  quiet  enjoyment.  In  case  of  any  disturbance  of  his  title,  a 
lawyer  needs  be  consulted ;  the  laws  in  different  States  vary  as  to  status 
and  remedy. 

Goods  by  Sample  or  Description.  In  the  case  of  sale  by  sample  there 
is  an  implied  warranty  that  the  bulk  shall  correspond  with  the  sample  in 
quality  and  be  free  from  defects  not  apparent  on  the  reasonable  examina- 
tion previous  to  acceptance.  Where  goods  are  sold  by  description,  there 
is  an  implied  warranty  that  they  answer  the  description ;  if  by  sample  as 
well  as  description,  the  goods  must  conform  to  both  sample  and  description. 
While  reference  has  been  made  earlier  to  sales  by  sample  and  description, 
it  should  be  understood  that  while  goods  may  fail  of  acceptance  if  they  are 
found  not  to  be  what  was  ordered,  it  often  happens  that  the  facts  may  not 
be  at  once  obvious  or  discoverable  in  the  ordinary  course  of  business,  and 
the  implied  warranty  protects  the  buyer  when  the  failure  becomes  evident, 
if  the  buyer  has  exercised  due  diligence. 

Purpose  of  Article.  In  a  similar  way  where  the  purpose  of  the  article 
is  known  to  the  seller,  whether  a  manufacturer  or  not,  and  the  buyer 
relies  upon  the  skill  and  judgment  of  the  seller,  there  is  an  implied  warranty 
of  the  fitness  of  the  article  for  the  purpose.  In  the  purchase  of  machinery 
this  is  of  importance,  and  the  engineer  may  be  interested,  sometimes  as 
buyer,  sometimes  as  seller.  Whether  reliance  was  placed  upon  the  seller 
or  manufacturer  and  the  purpose  understood  or  properly  conveyed,  may 
sometimes  present  difficulties  from  the  standpoint  of  evidence. 

The  custom  and  usage  of  the  trade  may  provide  such  a  warranty. 
There  is  an  implied  warranty  that  goods  are  of  merchantable  quality,  and 
the  warranty  in  some  cases  may  extend  to  the  future  condition  of  the  article. 
The  warranty  does  not  extend  to  sub-purchasers,  and  this  is  sometimes  of 
importance. 

On  General  Sale.  Where  articles  on  general  sale  are  ordered  by  their 
customary  or  trade  name,  there  is  no  such  warranty,  nor  is  there  when  the 
buyer  has  examined  the  goods,  if  such  examination  should  have  revealed 
the  defect  or  unfitness ;  but  otherwise  if  expert  examination  is  necessary 
or  if  the  buyer's  inspection  or  examination  was  understood  not  to  cover 
matters  concerning  which  reliance  was  had  on  the  seller's  skill  and  judg- 
ment. 

Remedy  for  Breach.  While  some  States  allow  rejection  and  return  of 
goods  in  case  of  breach  of  warranty,  the  rule  is  generally  otherwise.  The 
remedy  is  a  suit  for  damages,  and  the  measure  of  damages  is  the  difference 
between  the  value  of  the  actual  article  received  and  the  value  of  the  article 
as  warranted. 

In  case  of  fraud,  rather  than  breach  of  warranty,  the  contract  will  be  void. 


9_14  SALES 

DUTIES  OF  BUYER 

Title ;  Acceptance.  Sometimes  immediate  title  to  goods  seems  desirable 
to  the  seller,  but  sometimes  otherwise.  The  same  is  true  as  to  the  buyer. 
When  the  seller  makes  a  tender  of  the  goods,  it  is  the  duty  of  the  buyer 
to  accept  and  to  pay  the  price  on  the  terms  agreed  to ;  it  is  his  duty  to  take 
the  property  at  the  agreed  time,  and  time  is  often  of  the  essence  of  the 
contract. 

Acceptance  gives  title  and  cannot  be  revoked;  in  some  States  the 
buyer,  however,  may  have  a  remedy  for  damages  even  after  acceptance; 
this  generally  for  defects  not  apparent  at  acceptance.  In  some  cases 
acceptance  of  part  is  acceptance  of  all ;  it  is  a  matter  of  intent,  however. 

Inspection.  An  opportunity,  time,  and  place  for  inspection  may  be 
agreed  upon;  if  there  has  been  no  specific  agreement  there  must  be  a 
reasonable  opportunity  both  as  to  time  and  place.  Commonly  the  place  of 
delivery  is  the  place  of  inspection. 

Objections ;  Delay.  If  formal  and  deliberate  objections  to  acceptance 
in  certain  respects  are  made,  other  objections  are  held  to  be  waived.  If 
objections  prove  groundless,  the  title  is  then  the  buyer's.  Rejection,  if 
made,  must  be  prompt ;  delay  may  be  equivalent  to  acceptance.  If  goods 
are  rejected  the  buyer  is  not  under  obligations  to  return  the  goods.  When 
the  buyer  is  to  call  for  the  goods,  he  must  act  within  a  reasonable  time ; 
if  not,  the  seller  may,  at  his  option,  at  least  rescind  the  contract.  When 
title  has  vested,  it  is  the  buyer's  duty  to  take  the  goods  away.  There  is 
some  question  as  to  the  remedy  if  he  fails  to  do  so. 

Failure  to  Accept.  A  failure  to  accept  goods  when  duly  tendered  gives 
the  seller  a  right  to  damages,  and  in  some  States  a  right  to  the  price  from 
the  buyer,  the  seller  holding  the  property  as  trustee  for  the  buyer  while 
the  title  passes  to  buyer ;  a  suit  may  be  brought  at  once  after  the  buyer 
repudiates  his  contract. 

The  measure  of  damages  for  non-acceptance  is,  ordinarily,  the  differ- 
ence between  the  contract  price  and  the  market  price  at  the  time  and  place 
of  delivery,  if  the  latter  be  the  lesser,  unless  an  abnormal  market  price 
makes  this  improper. 

Where  there  is  a  breach  of  contract  to  accept  articles  in  process  of 
manufacture,  the  measure  of  damages  is  the  estimated  profit  on  the  com- 
pleted articles  less  the  profit  on  the  incomplete  article ;  a  loss  is  algebrai- 
cally a  minus  profit.  When  material  has  been  secured  but  no  work  has 
been  done,  the  difference  between  the  estimated  cost  and  the  price  is  the 
measure. 

Seller's  Lien.  Sometimes  the  seller  has  what  is  called  a  seller's  lien 
on  goods  sold.  Since  it  is  a  misnomer  for  him  to  have  a  lien  on  his  own 


SALES  9-13 

goods,  title  must  have  passed,  the  goods  must  be  in  the  seller's  possession 
or  equivalent  control,  and  the  price  must  in  some  way  be  due,  in  whole 
or  in  part,  except  in  case  of  bankruptcy.  Possession  of  part  only  of  the 
goods  gives  a  lien  on  that  part.  A  seller's  lien  may  be  in  favor  of  a  factor 
or  agent  and  enforced  by  him  as  well  as  by  his  principal. 

The  lien  may  be  waived,  whether  unwisely  or  not  does  not  matter; 
sometimes  this  is  done  by  giving  credit,  sometimes  on  the  guaranty  of  some 
third  party.  Even  in  these  cases,  however,  insolvency  of  the  buyer  re- 
vives the  lien,  and  it  is  revived  if  the  term  of  credit  expires.  If  at  any 
time  the  buyer  tenders  the  price,  the  lien  ceases. 

Stoppage  in  Transit.  In  a  somewhat  similar  way,  the  seller  has  the 
right  of  stoppage  in  transit ;  the  right,  fundamentally,  rests  on  "  the 
custom  of  merchants  " ;  it  is  now  well  established.  It  is  an  unusual  sort 
of  right.  It  attaches  after  the  seller  has  delivered  the  goods  to  the  carrier, 
and  thus  parted  with  possession ;  it  can  be  exercised  only  on  the  insolvency 
of  the  buyer.  This  is  not  necessarily  insolvency  in  the  technical  sense, 
equivalent  to  bankruptcy,  or  a  near  equivalent.  Insolvency  here  means 
inability  to  meet  debts  as  they  come  due  in  the  ordinary  course  of  business. 
When  it  is  clear  that  the  buyer  will  be  unable  to  pay  when  the  price  falls 
due,  the  right  of  stoppage  in  transit  may  be  exercised. 

The  right  ceases  when  the  buyer,  the  consignee,  obtains  possession; 
and  an  arrangement  between  the  buyer  and  the  carrier  by  which  the  latter 
holds  the  goods  as  warehouseman,  constitutes  a  control  by  the  consignee 
which  serves  the  purpose  of  possession ;  sufficient  so  that  the  right  ceases. 

Superior  to  Right  to  Attach.  The  seller's  right  of  stoppage  in  transit  is 
held  superior  to  the  right  of  creditors  of  the  buyer  to  attach  the  goods; 
their  right  is  no  better  than  the  buyer's ;  the  same  is  true  of  a  re-sale  by 
the  buyer  during  transit ;  the  purchaser  has  no  better  right  than  the  origi- 
nal buyer.  But  if  the  seller  transfers  to  the  buyer  a  bill  of  lading,  the  latter 
may  then  convey  by  re-sale  a  title  better  than  the  original  seller  then 
has ;  the  delivery  of  the  bill  of  lading  has  somewhat  of  the  quality  of  a 
delivery  of  the  goods,  enough  at  least  to  protect  the  third  party  if  the  goods 
were  transferred  in  good  faith  and  for  value.  Such  transference  is  also 
effective  when  made  as  a  pledge  or  mortgage  for  security ;  the  extent  of  the 
right  which  the  original  seller  retains  in  the  goods  is  then  limited  to  such 
interest,  if  any,  as  the  original  buyer  still  retains  in  the  goods  pledged 
or  mortgaged. 

Termination  of  Transit.  The  termination  of  transit  puts  an  end  to  the 
seller's  right  of  stoppage,  and  it  is  not  always  a  simple  matter  to  fix  the 
termination.  The  seller's  right  of  stoppage  applies  only  to  a  transit  caused 
by  the  seller.  A  later  transit  caused  by  the  buyer  may  follow  the  termina- 
tion of  the  original  transit.  This  original  transit  is  ended  when  the  goods 


9—16  SALES 

reach  the  buyer's  possession  or  are  in  an  equivalent  control  by  the  buyer. 
Delay  by  the  carrier,  or  refusal  to  deliver,  prolongs  it;  the  end  of  the 
journey  with  the  carrier  does  not  terminate  it  in  all  cases,  for  placing  the 
goods  in  a  warehouse  in  the  name  of  the  seller,  or  subject  to  his  order, 
leaves  them  still  under  his  control.  If  the  goods  are  placed  in  the  name 
of  the  buyer,  however,  the  transit  is  ended.  In  a  bonded  warehouse,  it  is 
a  question  of  fact  and  status  whether  the  goods  have  passed  from  the  con- 
trol of  the  seller;  the  courts  tend  to  favor  the  seller  in  this  matter. 
The  buyer  may  tender  performance  of  his  obligation  and  thus  terminate 
the  right  of  the  seller. 

Exercise  of  Right.  The  right  of  stoppage  in  transit  may  be  exercised 
by  the  seller  by  taking  actual  possession,  by  changing  the  consignment 
of  goods,  or  by  notice  to  the  carrier  or  other  party  in  temporary  control 
of  them.  If  the  seller  exercises  his  right  of  stoppage  in  transit,  he  must 
pay  the  costs  of  transportation  of  the  goods  in  question,  including  re- 
delivery  if  he  orders  this. 

The  exercise  of  this  right  simply  restores  the  goods  to  the  possession 
of  the  seller,  subject  to  such  further  action  as  he  may  deem  proper,  or  sub- 
ject to  tender  by  the  buyer.  In  the  case  of  perishable  goods,  the  seller 
must  take  action  to  protect  the  interests  of  the  buyer,  and  sell  at  once 
without  notice;  and  he  may  do  the  same  with  other  goods  if  the  buyer 
is  already  in  default.  Authorities  differ  as  to  whether,  under  other  cir- 
cumstances, notice  to  the  buyer  is  necessary  before  re-sale.  It  is  the 
part  of  wisdom  to  be  on  the  safe  side  and  to  give  notice  of  time  and  place 
of  re-sale,  if  practicable,  and  also  to  have  at  hand  evidence  as  to  the  facts 
which  justified  the  stoppage  in  transit.  An  entirely  legal  re-sale  gives  good 
title. 

Delay  by  Buyer.  Unreasonable  delay  on  the  part  of  the  buyer,  re- 
jection of  goods  which  conform  to  contract,  refusal  to  receive  goods  after 
title  has  passed,  all  justify  a  rescission  of  contract  by  the  seller,  and  may 
thus  give  the  seller  his  right  of  stoppage  in  transit.  The  seller  may  rightly 
prefer  to  retain  the  goods  rather  than  to  re-sell  at  once,  as  this  leaves  him 
the  remedy  of  damages  against  the  buyer.  Sometimes  the  buyer  rejects 
goods  which  really  conform  to  contract,  refuses  to  receive  them,  or  takes 
measures  to  prolong  transit,  doing  this  to  protect  the  seller  rather  than 
other  creditors,  and  the  courts  have  sometimes  commended  such  action. 

THE  RISK 

Relation  to  Title.  The  risk  of  loss  or  damage  normally  goes  with  the 
title;  but,  by  agreement,  the  title  and  the  risk  may  be  separated.  In 
general,  however,  unless  otherwise  agreed,  the  risk  is  in  the  seller  until  the 


SALES  9-17 

title  is  transferred  to  the  buyer,  after  which  the  risk  is  the  buyer's  whether 
delivery  has  been  made  or  not.  The  question  of  title  often  hinges  on  de- 
livery. When  delivery  has  been  delayed,  the  rule  differs  in  different  States ; 
in  some,  the  party  at  fault  suffers  the  loss,  in  others  not.  In  many  cases, 
title  passes  on  acceptance  of  the  goods  and  receipt  is  not  necessary;  in 
other  cases,  receipt  also  may  be  specified.  Shipments  specified  to  be  "  at 
buyer's  risk  "  are,  nevertheless,  held  to  be  at  seller's  risk  if  the  latter  is  also 
the  shipper  and  if  improper  methods  of  shipment  or  defects  in  cars  or  vessels 
are  the  cause  of  the  damage ;  but  not  if  he  is  the  seller  only,  without  control 
over  the  shipment. 

Conditional  Sales.  In  the  case  of  conditional  sales,  if  title  is  reserved 
in  the  seller  as  a  matter  of  security,  the  risk  is  the  buyer's.  The  seller  has 
no  further  duty,  but  has  only  to  receive  the  price ;  the  buyer  has  received 
his  full  consideration  under  the  contract.  In  effect,  he  has  acquired  title, 
and  mortgaged  back  to  the  seller.  This  rule,  however,  is  not  adopted 
in  all  the  decisions. 

It  is  wise,  when  possible,  to  have  the  terms  of  the  agreement  or  sale 
make  clear  where  the  risk  is  to  lie. 

Need  of  Uniform  Sales  Act.  As  has  been  shown,  the  laws  of  different 
States  vary  in  their  application  to  sales,  and  the  desirability  of  the  adoption 
of  some  Uniform  Sales  Act  seems  clear,  but  the  adoption  of  the  present  act 
of  that  name  is  not  yet  sufficiently  general  to  allow  its  use  in  this  chapter 
as  a  statement  of  the  law  of  sales  at  the  present  time.  In  view  of  this  con- 
flict of  laws,  it  is  important  to  note  that  the  interpretation  of  the  sale  or 
contract  will  be  made  under  the  laws  of  the  State  where  the  contract 
was  made,  rather  than  the  State  where  the  action  is  brought,  unless  other- 
wise stipulated. 


CHAPTER  X 

NEGOTIABLE  INSTRUMENTS 

Terms  Used.  The  term  "  commercial  paper  "  has  sometimes  been  used 
for  a  title  as  an  alternative  for  "  negotiable  instruments,"  but  the  latter  is 
the  term  more  generally  accepted  by  lawyers.  Considered  together,  a  better 
view-point  of  the  subject  is  secured  than  by  the  use  of  either  alone. 

BILL  OF  EXCHANGE 

Description.  If  a  merchant  A  in  London  buys  goods  from,  and  owes 
money  for  them  to,  B  in  Paris  ;  and  if  B  in  Paris,  at  the  same  time,  owes 
money  to  C  in  London  ;  it  is  very  clumsy  for  A  to  send  a  bag  of  gold  to 
B,  who  at  once  sends  back  most  of  it  in  a  bag  to  C.  It  is  much  simpler 
for  B  to  write  to  C,  arranging  for  him  to  go  to  A  and  get  the  money  which 
A  owes  By  or  part  of  it. 

Such  a  transaction  in  tune  became  standardized  into  the  "  bill  of  ex- 
change/' a  request,  or  rather  an  order,  from  B  to  A  to  pay  a  sum  named 
to  C,  charging  this  sum  to  the  account  of  B. 

Form  of  Bill.    A  bill  of  exchange  may  be  in  the  following  form  : 


New  York,____^.  2, 
efioot/y  d&>'U&  ____  after  date  pay  to  the  order  of 


value  received  and  charge  the  same  to  the  account  of 


To  IMUvm,  0m**, 


The  person  who  executes  the  bill,  Henry  Jenks,  is  called  the  drawer; 
William  Ames,  the  drawee  ;  and  Alexander  Winchester,  the  payee. 

10—1 


1O-2  NEGOTIABLE   INSTRUMENTS 

Acceptance.  The  routine  established  is  for  Alexander  Winchester  to 
take  the  "  bill  "  to  William  Ames  for  his  "  acceptance."  If  the  latter 
accepts  the  bill,  he  signs  his  name  to  that  effect  on  the  bill  and  this 
amounts  to  an  acknowledgment  of  obligation  to  Henry  Jenks,  together 
with  an  agreement  to  pay  Alexander  Winchester  or  order  at  the  specified 
time. 

Form  of  Acceptance.    The  form  of  acceptance  may  be  : 


cut 


Any  other  words,  with  signature,  are  sufficient  if  they  show  the  intent. 

Negotiation.  In  the  course  of  time  the  function  of  the  bill  of  exchange 
was  extended.  Alexander  Winchester  owed  money  to  Philip  Clark  who 
did  not  care  to  lug  around  coin  ;  so  Winchester  turned  the  bill  over  to  Clark, 
indorsing  it  to  him  ;  Clark  perhaps  indorsed  to  another,  and  the  bill  of  ex- 
change as  a  negotiable  instrument  was  a  great  boon  in  business  transactions. 

Use  of  Bill  of  Exchange  with  Bill  of  Lading.  A  bill  of  exchange  is  now 
used  mainly  in  connection  with  a  sale  of  goods.  Bills  are  often  in  dupli- 
cate, and  sent  by  different  mails.  Sometimes  the  bill  is  sent  attached  to 
the  bill  of  lading  to  some  third  party  (perhaps  a  bank)  who  advances  money 
on  it,  looking  to  the  bill  of  lading  in  part  for  security.  The  carrier  has  no 
right  to  deliver  goods  without  presentation  of  the  bill  of  lading. 

Sometimes  the  two  bills  are  sent  together  to  some  one  as  agent  for  the 
drawer  (perhaps  again  a  bank)  who  is  instructed  to  deliver  the  bill  of  lad- 
ing when  the  bill  of  exchange  is  accepted,  dependence  being  thus  placed  in 
part  on  the  credit  of  the  drawee,  the  consignee,  and  in  part  on  his  acknowl- 
edgment of  his  obligation  to  pay. 

CHECKS 

Checks.  Later  "  banks  "  were  established  and  merchants  "  deposited  " 
money  in  them  and  kept  their  accounts  sufficiently  large  so  that  they  were 
drawing  on  them  constantly,  and  the  bill  of  exchange  took  a  simpler  form 
in  the  well-known  "  check  "  which  is  now  accorded  a  character  of  its  own, 
somewhat  distinct  from  the  bill  of  exchange.  Debts  were  paid  by  checks 
and  these  were  first  sent  to  the  banks  for  collection,  but  now  they  go  at 
once  into  the  depositor's  account  as  the  equivalent  of  cash.  The  check 
often  goes  through  various  hands  before  reaching  the  bank  on  which  it  is 
drawn,  each  holder  indorsing  it  to  the  next  holder  ;  it  has  become  a  nego- 
tiable instrument. 


NEGOTIABLE   INSTRUMENTS  1O-3 

Indorsement.  The  nature  of  indorsement  is  this.  If  a  bill  of  ex- 
change, or  note,  or  check,  has  come  into  the  hands  of  some  man  who  is 
transferring  it  to  another,  he  signs  his  name  across  it,  commonly  on  its 
back.  By  this  act  of  signing,  unless  there  are  added  words  of  qualifica- 
tion, he  authorizes  its  transfer  to  another  who  is  often  specified;  if  he 
delivers  it,  he  does  transfer  it.  He  also  agrees  by  thus  signing  his  name 
that  he  will  pay  it  if  the  drawer  or  maker  does  not  do  so.  His  indorsement 
is  a  protection  to  later  holders;  any  earlier  indorser  is  a  protection  to 
him.  His  act  of  signing  is  an  "  indorsement  "  and  he  is  an  "  indorser." 
A  very  common  form  of  indorsement  is  : 


to  tfut  vulzi,  of 


PROMISSORY  NOTES 

Description.  A  merchant,  manufacturer,  or  publisher  finds  that  at 
certain  times  of  the  year  he  must  make  extensive  payments  for  material 
or  labor,  while  his  sales  and  the  payments  for  them  come  at  a  later  time. 
It  is  good  business  policy  for  him  to  borrow  money  from  one  who  has  it 
available,  giving  his  "  promissory  note  "  for  it,  promising  a  future  pay- 
ment. Nowadays  his  borrowing  is  from  a  bank  as  a  rule.  The  payment 
for  materials  or  goods  may,  however,  be  directly  made  by  a  "  note  "  to 
the  seller,  and  in  such  case  the  payee  of  the  note  may  take  it  to  a  bank  and 
in  effect  sell  it  to  them,  indorsing  it  ;  it  may  go  through  several  hands  as  a 
"  negotiable  instrument  "  with  a  series  of  indorsements. 

Form  of  Promissory  Note.     The  form  of  note  may  be  : 


New 
rvivt/lf  da/Ufa  ____  after  date  I  promise  to  pay  to  the  order  of 

v  ttottidouy.  ________________________ 


11 

jL/oiiars 


Payable  at—  -<$W/0#  dratioVboL  8a/tt&  of 
Value  received. 


or  some  similar  form.  Hiram  Weeks  who  executes  the  note  is  called  the 
maker  and  Benjamin  Holliday  the  payee.  The  time  of  payment  is  some- 
times "  on  demand  "  or  on  some  specific  date  as  "  on  May  1,  1917." 


1O-4  NEGOTIABLE  INSTRUMENTS 

The  use  of  checks  and  of  promissory  notes  is  widespread,  and  the  use 
of  bills  of  exchange  is  also  sufficiently  important  so  that  the  practice  and 
rules  of  law  connected  with  their  use  must  be  adapted  to  the  necessities 
and  convenience  of  business. 

Law  Merchant.  It  is  sometimes  stated  that  the  law  of  negotiable  in- 
struments follows  the  "  Law  Merchant  "  rather  than  the  Common  Law. 
The  distinction  is  a  technical  one  except  to  lawyers ;  in  the  case  of  nego- 
tiable instruments  the  customs  of  business  among  merchants  and  the 
necessities  of  its  convenient  conduct  formed  the  basis  upon  which  finally 
grew  up  a  series  of  decisions  under  the  Common  Law  rather  than  apart 
from  it.  These  decisions  must  be  looked  to  in  determining  what  the  law 
is  and  the  same  courts  pass  upon  it.  It  has  sometimes  been  stated  that 
the  Law  Merchant  has  been  "  grafted  "  upon  the  Common  Law. 

Some  Distinctions.  Promissory  notes,  or  bills  of  exchange  when  ac- 
cepted, are  contracts,  but  of  a  special  kind  which  the  Common  Law  has 
treated  in  a  special  way,  differing  from  that  accorded  most  contracts.  An 
important  point  of  difference  is  that  no  consideration  need  be  expressed 
in  a  negotiable  instrument.  A  second  is  that  in  the  hands  of  an  innocent 
holder  for  value,  an  instrument  legally  issued  is  good,  even  if  con- 
sideration has  failed  or  other  faults  'exist  which  would  ordinarily  render 
a  contract  voidable  between  the  parties  involved ;  this  will  better  appear 
later. 

Foreign  and  Inland.  Bills  of  exchange  are  foreign  or  inland.  When 
payable  in  another  State  or  country  from  that  where  drawn,  they  are 
foreign ;  when  in  the  same  State  or  country,  inland. 

Drafts.  What  is  known  as  a  "  draft  "  is  in  essence  a  bill  of  exchange, 
and  differs  from  it  in  that  a  draft  often  does  not  presuppose  any  other 
commercial  transaction,  while  the  bill  of  exchange  commonly  does,  often 
a  sale,  and  the  draft  usually  calls  for  immediate  or  prompt  payment 
rather  than  acceptance.  A  student  at  college  makes  a  draft  on  his  father 
to  pay  his  term  bill,  and  this  draft  is  deposited  in  the  bank  with  the 
checks  which  others  have  paid  in,  and  the  draft  is  negotiable. 

Bank  Drafts.  Banks  are  constantly  issuing  "  bank  drafts  "  or  orders 
upon  other  banks  where  they  have  funds.  If  a  depositor  wishes  to  send 
money  to  some  distant  point,  or  if  he  travels  far  from  home,  he  secures  a 
bank  draft  which  will  be  honored  provided  only  the  payee  be  identified, 
and  where  his  own  check  might  not  be  honored  through  lack  of  personal 
credit.  Some  acquaintance  will  gladly  identify  him,  but  ought  not  to  be 
asked  to  indorse  his  personal  check.  A  bank  draft  on  a  New  York  bank 
is  accepted  practically  anywhere  in  the  United  States.  A  bank  draft  on 
Chicago,  San  Francisco,  or  Boston  is  almost  equally  good  in  the  neighbor- 
hood of  such  city.  Bank  drafts  are  negotiable. 


NEGOTIABLE   INSTRUMENTS  1O-5 

Certificates  of  Deposit.  A  depositor  in  a  bank  sometimes  wants  the 
money  to  draw  interest,  and  does  not  care  to  draw  checks  against  it.  He 
takes  a  "  certificate  of  deposit  "  which  is  substantially  the  promissory  note 
of  the  bank.  It  is  commonly  assignable  and  negotiable. 

Bank  Notes.  Bank  notes  of  national  banks  are  not  receivable  as 
money  for  certain  purposes ;  they  are  not  legal  tender.  They  are  essen- 
tially promissory  notes,  and  are  negotiable,  and  are  made  payable  to  bearer 
so  that  an  indorsement  is  not  necessary.  United  States  gold  and  silver 
certificates  are  likewise  not  legal  tender.  Legal  tender  may  be  defined  as 
money  receivable  for  all  debts.  What  is  legal  tender  is  defined  by  the 
Legal  Tender  Acts,  which  are  United  States  Statutes. 

Travelers'  Cheques.  People  traveling  abroad  often  use  "  travelers' 
cheques  "  of  which  the  American  Express  Company  checks  were  among 
the  earliest;  they  are  a  series  of  checks  against  the  American  Express 
Company,  each  for  a  specified  amount.  They  are  negotiable,  are  signed 
by  the  traveler  when  he  gets  them,  and  are  indorsed  by  him,  as  the  payee, 
when  he  receives  money  for  them. 

Letters  of  Credit.  "  Letters  of  credit  "  serve  a  somewhat  similar  pur- 
pose, but  are  materially  different  in  form  and  are  not  negotiable. 

Coupon  Bonds.  Coupon  bonds  issued  by  railroads  or  by  large  cor- 
porations are  also  negotiable,  unless  registered  so  that  any  transfer  must 
appear  on  the  books  of  the  company ;  it  is  not  customary  to  indorse  them. 
They  have  "  coupons  "  attached  to  them,  each  due  every  half  year  as  a 
rule,  and  containing  a  statement  or  agreement  as  to  payment.  Such 
coupons  are  negotiable,  and  commonly  even  when  the  bond  is  registered, 
which  means  registered  as  to  principal.  The  coupons  are  seldom  indorsed. 
Registered  bonds  often,  however,  have  no  coupons  attached  and  the 
interest  is  then  paid  by  check. 

Certificates  of  Stock.  Certificates  of  stock  are  assignable,  but  are 
simply  evidence  of  rights  in  a  company,  and  do  not  call  for  the  payment 
of  money  at  any  time ;  although  assignable,  they  are  not  negotiable. 

The  Negotiable  Instruments  Law.  The  law  of  negotiable  instruments 
is  exceptionally  well  stated  and  codified  in  what  is  called  "  The  Negotiable 
Instruments  Law,"  which  has  been  adopted  with  little  variation  by  a  large 
majority  of  the  States.  It  is  given  below  substantially  in  full  from  the 
New  York  law.  The  order  of  Articles  is  changed  slightly,  and  a  few  com- 
ments are  made,  and  are  distinguishable  by  the  type,  a  smaller  type  being 
used  for  the  law  itself.  It  is  unusually  well  prepared,  a  fine  specimen  of 
Statute  Law.  Most  of  what  is  contained  in  it  was  good  Common  Law  in 
one  or  another  of  the  States,  but  there  had  been  appreciable  variation  in 
the  law  as  interpreted  in  the  different  States  which  have  adopted  it. 


1O-6  NEGOTIABLE   INSTRUMENTS 

LAWS   OF  NEW   YORK 
AN  ACT  in  relation  to  Negotiable  Instruments.    [In  effect  February  17,  1909.1 

Article  I.  Short  title;  definitions  (§§  1,  2). 

II.  General  provisions  (§§  3-7). 

III.  Form  and  interpretation^  §  20-42). 

IV.  Consideration  (§§  50-55). 
V.  Negotiation  (§§  60-80). 

VI.  Rights  of  holder(§§  9O-98). 

VII.  Liabilities  of  parties  (§§  110-119). 

VIII.  Presentment  for  payment  (§§  130-148). 

IX.  Notice  of  dishonor  (§§  160-189). 

X.  Discharge  (§§  200-206). 

XI.  Bills  of  exchange ;   form  and  interpretation  (§§  210-215). 

XII.  Acceptance  (§§  220-230). 

XIII.  Presentment  for  acceptance  (§§  240-248). 

XIV.  Protest  (§§  260-268). 

XV.  Acceptance  for  honor  (§§  280-289). 

XVI.  Payment  for  honor  (§§  300-306). 

XVII.  Bills  in  sets  (§§  310-315). 

XVIII.  Promissory  notes  and  checks  (§§  320-326). 

XIX.  Notes   given   for   patent   rights  and  for  a  speculative   consideration 

(§§  330-332). 

XX.  Laws  repealed;  when  to  take  effect  (§§  340-341). 

ARTICLE   I 

SHORT  TITLE;    DEFINITIONS 

§  1.  Short  title.  —  This  chapter  shall  be  known  as  the  "  Negotiable  Instru- 
ments Law." 

§  2.  Definitions  and  meaning  of  terms.  —  In  this  chapter,  unless  the  context 
otherwise  requires : 

"Acceptance"  means  an  acceptance  completed  by  delivery  or  notification. 

"Action"  includes  counter-claim  and  set-off. 

"Bank"  includes  any  person  or  association  of  persons  carrying  on  the  business 
of  banking,  whether  incorporated  or  not. 

"Bearer'*  means  the  person  in  possession  of  a  bill  or  note  which  is  payable  to 
bearer. 

"Bill"  means  bill  of  exchange,  and  "note"  means  negotiable  promissory  note. 

"Delivery"  means  transfer  of  possession,  actual  or  constructive,  from  one 
person  to  another. 

"Holder"  means  the  payee  or  indorsee  of  a  bill  or  note,  who  is  in  possession  of 
it,  or  the  bearer  thereof. 

"Indorsement"  means  an  indorsement  completed  by  delivery. 

"Instrument"  means  negotiable  instrument. 

"Issue"  means  the  first  delivery  of  the  instrument,  complete  in  form,  to  a  per- 
son who  takes  it  as  a  holder. 

"Person"  includes  a  body  of  persons,  whether  incorporated  or  not. 

"Value"  means  valuable  consideration. 

"Written"  includes  printed,  and  "writing"  includes  print. 


NEGOTIABLE   INSTRUMENTS  1O-7 

ARTICLE  II 

GENERAL    PROVISIONS 

§  3.  Person  primarily  liable  on  instrument.  —  The  person  "primarily"  liable 
on  an  instrument  is  the  person  who  by  the  terms  of  the  instrument  is  absolutely 
required  to  pay  the  same.  All  other  parties  are  "secondarily"  liable. 

A  negotiable  instrument  is  sometimes  indorsed  without  consideration  as 
a  friendly  act,  or  an  "  accommodation  "  to  the  maker.  Sometimes  the  friend 
has  accommodated  by  becoming  the  maker  of  the  instrument,  and  turning 
it  over  to  the  real  borrower  on  the  instrument  (or  similar  user  of  it)  who 
indorses  it  and  thus  becomes  formally  identified  with  it.  In  the  case  of 
an  "  accommodation  "  maker,  it  is  held  that  the  addition  of  the  word  surety 
does  not  relieve  him  from  primary  liability  to  holders  in  due  course. 

§  4.  Reasonable  time,  what  constitutes.  —  In  determining  what  is  a  "reason- 
able time"  or  an  "unreasonable  time,"  regard  is  to  be  had  to  the  nature  of  the 
instrument,  the  usage  of  trade  or  business  (if  any)  with  respect  to  such  instruments, 
and  the  facts  of  the  particular  case. 

§  5.  Time,  how  computed;  when  last  day  falls  on  holiday.  —  Where  the  day, 
or  the  last  day,  for  doing  any  act  herein  required  or  permitted  to  be  done  falls  on 
Sunday  or  on  a  holiday,  the  act  may  be  done  on  the  next  succeeding  secular  or 
business  day. 

§  6.  Application  of  chapter.  —  The  provisions  of  this  act  do  not  apply  to 
negotiable  instruments  made  and  delivered  prior  to  the  passage  hereof. 

§  7.  Law  merchant ;  when  governs.  —  In  any  case  not  provided  for  in  this  act 
the  rules  of  the  law  merchant  shall  govern. 

It  is  not  entirely  clear  what  Section  7  means.  Apparently  it  means 
that  the  law  previously  in  force  with  relation  to  negotiable  instruments 
shall  govern  rather  than  the  law  applied  to  contracts  in  general. 

ARTICLE  XI 
BILLS  OP  EXCHANGE;  FORM  AND  INTERPRETATION 

§  210.  Bill  of  exchange  defined.  —  A  bill  of  exchange  is  an  unconditional  order 
in  writing  addressed  by  one  person  to  another,  signed  by  the  person  giving  it,  re- 
quiring the  person  to  whom  it  is  addressed  to  pay  on  demand  or  at  a  fixed  or  deter- 
minable  future  time  a  sum  certain  in  money  to  order  or  to  bearer. 

§  211.  Bill  not  an  assignment  of  funds  in  hands  of  drawee.  —  A  bill  of  itself 
does  not  operate  as  an  assignment  of  the  funds  in  the  hands  of  the  drawee  avail- 
able for  the  payment  thereof  and  the  drawee  is  not  liable  on  the  bill  unless  and 
until  he  accepts  the  same. 

§  212.  Bill  addressed  to  more  than  one  drawee.  —  A  bill  may  be  addressed  to 
two  or  more  drawees  jointly,  whether  they  are  partners  or  not ;  but  not  to  two  or 
more  drawees  in  the  alternative  or  in  succession. 

§  213.  Inland  and  foreign  bills  of  exchange.  —  An  inland  bill  of  exchange  is  a 
bill  which  is,  or  on  its  face  purports  to  be,  both  drawn  and  payable  within  the  State. 


1O-8  NEGOTIABLE   INSTRUMENTS 

Any  other  bill  is  a  foreign  bill.  Unless  the  contrary  appears  on  the  face  of  the 
bill,  the  holder  may  treat  it  as  an  inland  bill. 

§  214.  When  bill  may  be  treated  as  promissory  note.  —  Where  in  a  bill  the  drawer 
and  drawee  are  the  same  person,  or  where  the  drawee  is  a  fictitious  person,  or  a 
person  not  having  capacity  to  contract,  the  holder  may  treat  the  instrument,  at 
his  option,  either  as  a  bill  of  exchange  or  a  promissory  note. 

§  215.  Referee  in  case  of  need.  —  The  drawer  of  a  bill  and  any  indorser  may 
insert  thereon  the  name  of  a  person  to  whom  the  holder  may  resort  in  case  of  need, 
that  is  to  say,  in  case  the  bill  is  dishonored  by  non-acceptance  or  non-payment. 
Such  person  is  called  the  referee  in  case  of  need.  It  is  in  the  option  of  the  holder 
to  resort  to  the  referee  in  case  of  need  or  not,  as  he  may  see  fit. 

ARTICLE   XVIII 

PROMISSORY  NOTES  AND  CHECKS 

§  320.  Promissory  note  defined.  —  A  negotiable  promissory  note  within  the 
meaning  of  this  act  is  an  unconditional  promise  in  writing  made  by  one  person 
to  another,  signed  by  the  maker,  engaging  to  pay  on  demand  or  at  a  fixed  or  deter- 
minable  future  time  a  sum  certain  in  money  to  order  or  to  bearer.  Where  a  note 
is  drawn  to  the  maker's  own  order,  it  is  not  complete  until  indorsed  by  him. 

§  321.  Check  defined.  —  A  check  is  a  bill  of  exchange  drawn  on  a  bank,  pay- 
able on  demand.  Except  as  herein  otherwise  provided,  the  provisions  of  this  act 
applicable  to  a  bill  of  exchange  payable  on  demand  apply  to  a  check. 

While  checks  are  in  many  ways  bills  of  exchange  they  have  come  to 
have  characters  and  features  of  their  own.  A  check  is  always  drawn  upon 
a  bank,  and  drawn  against  funds  actually  in  the  bank.  A  check  is  some- 
times paid  when  the  account  is  overdrawn,  but  this  is  irregular,  and  is 
seldom  countenanced,  although  sometimes  winked  at.  The  death  of  the 
drawer  of  a  check  revokes  it  as  soon  as  the  bank  has  notice,  although  the 
check  in  this  case  is  probably  good  against  the  estate  as  evidence  of  debt. 
A  check  which  is  not  honored  does  not  pay  a  debt ;  the  creditor  can  sue 
on  the  debt. 

The  order  in  a  check  need  not  be  unconditional.  A  condition  sometimes 
is  attached,  as  "  payable  only  through  the  clearing  house  "  which  makes 
it  not  payable  over  the  counter  of  the  bank  on  which  it  is  issued. 

The  deposit  of  a  check  puts  the  money  to  the  credit  of  the  depositor 
at  once,  unless  taken  for  collection,  and  the  bank  may  (but  seldom  does) 
refuse  to  accept  checks  deposited,  except  for  collection.  The  ordinary  cus- 
tom is  that  the  depositor  may  check  out  at  once  against  the  deposit,  the 
credit  to  be  canceled  in  case  of  dishonor.  A  bank  may,  however,  refuse  to 
pay  a  check  where  the  deposit  is  insufficient  without  certain  checks  placed 
on  deposit ;  the  credit  of  the  depositor  may  enter  into  such  action. 

A  depositor  may  stop  payment  on  a  check  by  proper  notice  to  the 
bank.  By  doing  so  he  may  be  liable  in  a  suit  to  the  payee  or  holder  of  the 
check ;  but  the  bank  may  properly  refuse  to  pay  the  check.  If  stopped 


NEGOTIABLE   INSTRUMENTS  1O-9 

because  a  check  has  been  lost,  payment  should  not  be  made  by  a  check 
for  the  same  amount  on  the  same  bank  without  proper  notice  to  the  bank. 
A  check  on  another  bank,  a  New  York  draft,  or  a  certified  check  are  suit- 
able methods  of  payment  in  such  cases.  A  new  check,  marked  "  dupli- 
cate," is  often  used  but  is  less  desirable. 

Entering  a  check  in  a  customer's  bank  book  and  crediting  to  his  ac- 
count does  not  make  the  bank  a  "  holder  for  value/'  but  if  the  bank  has 
paid  to  the  depositor  money  available  only  from  such  deposit,  the  bank  is 
then  a  holder  for  value  to  the  extent  of  such  payment. 

§  322.  Within  what  time  a  check  must  be  presented.  —  A  check  must  be  pre- 
sented for  payment  within  a  reasonable  time  after  its  issue  or  the  drawer  will  be 
discharged  from  liability  thereon  to  the  extent  of  the  loss  caused  by  the  delay. 

When  a  payee  neglects  to  present  his  check  promptly  in  the  regular 
course  of  business,  and  the  bank  fails,  the  loss  is  on  the  payee  and  not  on 
the  drawer  of  the  check.  Delay  in  presentment  of  the  check  does  not 
discharge  the  drawer  unless  he  can  show  damage ;  this  he  can  do  in  case 
of  the  failure  of  the  bank. 

§  323.  Certification  of  check;  effect  of.  —  Where  a  check  is  certified  by  the 
bank  on  which  it  is  drawn  the  certification  is  equivalent  to  an  acceptance. 

§  324.  Effect  where  the  holder  of  check  procures  it  to  be  certified.  —  Where  the 
holder  of  a  check  procures  it  to  be  accepted  or  certified  the  drawer  and  all  endorsers 
are  discharged  from  liability  thereon. 

§  325.  When  check  operates  as  an  assignment.  —  A  check  of  itself  does  not 
operate  as  an  assignment  of  any  part  of  the  funds  to  the  credit  of  the  drawer  with 
the  bank,  and  the  bank  is  not  liable  to  the  holder,  unless  and  until  it  accepts  or 
certifies  the  check. 

§  326.  Recovery  of  forged  check.  —  No  bank  shall  be  liable  to  a  depositor  for 
the  payment  by  it  of  a  forged  or  raised  check,  unless  within  one  year  after  the  re- 
turn to  the  depositor  of  the  voucher  of  such  payment,  such  depositor  shall  notify 
the  bank  that  the  check  so  paid  was  forged  or  raised.  (This  section  added  by 
Laws  of  1904,  chap.  287.) 

In  certain  formal  matters  of  payment,  the  payee  demands  something 
more  than  the  credit  of  the  drawer  as  expressed  by  his  personal  check.  If 
the  check  is  certified,  the  credit  of  the  bank  is  substituted.  The  proper 
officer  of  the  bank  attaches  his  signature  to  the  certification ;  the  president, 
cashier,  or  paying  teller  has  an  accepted  right  to  certify. 

Certification  is  in  effect  acceptance  by  the  bank,  and  discharges  the 
drawer  and  indorsers.  Its  effect  is  to  guarantee  the  drawer's  signature 
and  sufficiency  of  funds,  and  the  amount  of  the  check  is  at  once  with- 
drawn from  the  deposit  and  reserved  for  payment  of  the  check.  Certifica- 
tion does  not  guarantee  any  matter  of  good  faith  or  consideration  between 
the  parties.  The  drawer  cannot  stop  payment  on  a  certified  check. 

A  check  presented  for  certification  may  be  retained  for  a  time,  even 


1O-10  NEGOTIABLE   INSTRUMENTS 

24  hours,  for  examination.  The  presentation  for  certification  is  made 
sometimes  by  the  payee  or  other  holder,  sometimes  by  the  drawer  before 
delivery  to  payee. 

Attachment  of  a  deposit  will  preserve  for  the  creditors  so  much  as  the 
attachment  specifies,  and  no  check  will  afterward  be  honored,  if  its  pay- 
ment will  reduce  the  account  below  the  specified  amount.  The  bank  is 
protected  in  refusing  to  pay. 

ARTICLE   III 

FORM    AND    INTERPRETATION 

§  20.  Form  of  negotiable  instrument.  —  An  instrument  to  be  negotiable  must 
conform  to  the  following  requirements : 

1.  It  must  be  in  writing  and  signed  by  the  maker  or  drawer. 

The  signature,  however,  may  be  by  initials,  or  any  signature  the  maker 
may  adopt  as  his  own ;  it  may  be  printed,  or  made  by  a  stamp ;  it  may 
be  a  "  mark  "  properly  attested.  The  instrument,  of  course,  must  be  cer- 
tain as  to  the  person  signing.  There  may  readily  be  a  question  as  to  the 
business  wisdom  of  signing  by  a  print  or  stamp. 

2.  Must  contain  an  unconditional  promise  or  order  to  pay  a  sum  certain  in 
money. 

A  bill  of  exchange  must  contain  an  order,  while  a  note  must  contain  a 
promise.  An  order  is  necessary;  a  request  is  not  sufficient.  Payment 
must  be  made  in  money  only,  and  this  means  legal  tender,  although  other 
kinds  of  currency  are  in  general  use,  and  are  commonly  accepted  in  pay- 
ment, and  are  legal  if  so  accepted. 

3.  Must  be  payable  on  demand,  or  at  a  fixed  or  determinable  future  time. 

4.  Must  be  payable  to  order  or  to  bearer ;  and 

5.  Where  the  instrument  is  addressed  to  a  drawee,  he  must  be  named  or  other- 
wise indicated  therein  with  reasonable  certainty. 

What  is  known  as  a  "  crossed  check  "  is  little  used  in  this  country. 
It  has  lines  drawn  across  it,  and  requires  presentation  through  some  other 
bank,  to  whom  it  is  supposed  the  payee  is  known.  Sometimes  the  other 
bank  is  specified ;  sometimes  it  is  "  payable  only  through  the  clearing 
house." 

§  21.    Certainty  as  to  sum;  what  constitutes.  —  The  sum  payable  is  a  sum  cer- 
tain within  the  meaning  of  this  act,  although  it  is  to  be  paid : 
1.   With  interest ;  or 

Discount  is  in  its  nature  similar  to  interest.  A  note  for  $100  payable 
six  months  after  date  may  be  taken  to  a  bank,  or  sold  to  some  individual, 
and  "  discounted."  If  the  interest  rate  is  6  per  cent,  the  discount  for  6 


NEGOTIABLE   INSTRUMENTS  1O-11 

months  will  be  figured  as  $3  and  the  bank  or  individual  will  pay  $97  for  it. 
More  precisely,  as  a  matter  of  mathematics  the  sum  should  be  $100  divided 
by  1.03,  or  $97.09,  but  bank  practice  does  not  follow  this  method  of  figuring. 

2.  By  stated  instalments ;   or 

3.  By  stated  instalments,  with  a  provision  that  upon  default  in  payment  of 
any  instalment  or  of  interest,  the  whole  shall  become  due ;   or 

4.  With  exchange,  whether  at  a  fixed  rate  or  at  the  current  rate ;   or 

5.  With  costs  of  collection  or  an  attorney's  fee,  in  case  payment  shall  not  be 
made  at  maturity. 

§  22.  When  promise  is  unconditional.  —  An  unqualified  order  or  promise  to 
pay  is  unconditional  within  the  meaning  of  this  act,  though  coupled  with : 

1.  An  indication  of  a  particular  fund  out  of  which  reimbursement  is  to  be 
made,  or  a  particular  account  to  be  debited  with  the  amount ;   or 

2.  A  statement  of  the  transaction  which  gives  rise  to  the  instrument. 

But  an  order  or  promise  to  pay  out  of  a  particular  fund  is  not  unconditional. 

§  23.  Determinable  future  time;  what  constitutes.  —  An  instrument  is  payable 
at  a  determinable  future  time,  within  the  meaning  of  this  act,  which  is  expressed 
to  be  payable : 

1.  At  a  fixed  period  after  date  or  sight ;   or 

2.  On  or  before  a  fixed  or  determinable  future  time  specified  therein ;  or 

3.  On  or  at  a  fixed  period  after  the  occurrence  of  a  specified  event,  which  is 
certain  to  happen,  though  the  time  of  happening  be  uncertain. 

An  instrument  payable  upon  a  contingency  is  not  negotiable,  and  the  happen- 
ing of  the  event  does  not  cure  the  defect. 

§  24.  Additional  provisions  not  affecting  negotiability.  —  An  instrument  which 
contains  an  order  or  promise  to  do  any  act  in  addition  to  the  payment  of  money  is 
not  negotiable.  But  the  negotiable  character  of  an  instrument  otherwise  negotiable 
is  not  affected  by  a  provision  which : 

1.  Authorizes  the  sale  of  collateral  securities  in  case  the  instrument  be  not 
paid  at  maturity ;   or 

When  a  loan  is  made  and  a  note  given,  the  lender  often  demands  some- 
thing as  security  in  addition  to  the  credit  of  the  borrower.  A  bond  or  a 
certificate  of  stock  or  something  similar  having  commercial  value  is  often 
deposited  as  "  collateral  "  security,  to  be  held  and  not  disposed  of  unless 
the  borrower  fails  to  pay  the  note  at  maturity. 

2.  Authorizes  a  confession  of  judgment  if  the  instrument  be  not  paid  at  ma- 
turity; or 

3.  Waives  the  benefit  of  any  law  intended  for  the  advantage  or  protection  of 
the  obligor ;  or 

4.  Gives  the  holder  an  election  to  require  something  to  be  done  in  lieu  of  pay- 
ment of  money. 

But  nothing  in  this  section  shall  validate  any  provision  or  stipulation  other- 
wise illegal. 

§  25.  Omissions;  seal;  particular  money.  —  The  validity  and  negotiable  char- 
acter of  an  instrument  are  not  affected  by  the  fact  that : 

1.   It  is  not  dated ;  or 


1O-12  NEGOTIABLE   INSTRUMENTS 

2.  Does  not  specify  the  value  given,  or  that  any  value  has  been  given  therefor ; 
or 

3.  Does  not  specify  the  place  where  it  is  drawn  or  the  place  where  it  is  pay- 
able; or 

4.  Bears  a  seal ;  or 

5.  Designates  a  particular  kind  of  current  money  in  which  payment  is  to  be 
made. 

But  nothing  in  this  section  shall  alter  or  repeal  any  statute  requiring  in  cer- 
tain cases  the  nature  of  the  consideration  to  be  stated  in  the  instrument. 

§  26.    When  payable  on  demand.  —  An  instrument  is  payable  on  demand : 

1.  Where  it  is  expressed  to  be  payable  on  demand,  or  at  sight,  or  on  presen- 
tation; or 

2.  In  which  no  time  for  payment  is  expressed. 

Where  an  instrument  is  issued,  accepted  or  indorsed  when  overdue,  it  is,  as 
regards  the  person  so  issuing,  accepting  or  indorsing  it,  payable  on  demand. 

§  27.  When  payable  to  order.  —  The  instrument  is  payable  to  order  where  it  is 
drawn  payable  to  the  order  of  a  specified  person  or  to  him  or  his  order.  It  may 
be  drawn  payable  to  the  order  of : 

1.  A  payee  who  is  not  maker,  drawer  or  drawee;  or 

2.  The  drawer  or  maker;   or 

3.  The  drawee ;  or 

4.  Two  or  more  payees  jointly ;  or 

5.  One  or  some  of  several  payees ;  or 

6.  The  holder  of  an  office  for  the  time  being. 

Where  the  instrument  is  payable  to  order  the  payee  must  be  named  or  other- 
wise indicated  therein  with  reasonable  certainty. 

§  28.    When  payable  to  bearer.  —  The  instrument  is  payable  to  bearer : 

1.  When  it  is  expressed  to  be  so  payable ;  or 

2.  When  it  is  payable  to  a  person  named  therein  or  bearer;   or 

3.  When  it  is  payable  to  the  order  of  a  fictitious  or  non-existing  person,  and 
such  fact  was  known  to  the  person  making  it  so  payable ;   or 

4.  When  the  name  of  the  payee  does  not  purport  to  be  the  name  of  any  per- 
son; or 

5.  When  the  only  or  last  indorsement  is  an  indorsement  in  blank. 

When  the  instrument  is  payable  to  "  wages/'  "  sundries,"  or  "  cash," 
this  is  equivalent  to  payable  to  "  bearer."  Payable  to  bearer,  John  Brown, 
is  not  payable  to  bearer. 

§  29.  Terms,  when  sufficient.  —  The  instrument  need  not  follow  the  language 
of  this  chapter,  but  any  terms  are  sufficient  which  clearly  indicate  an  intention  to 
conform  to  the  requirements  hereof. 

§  30.  Date,  presumption  as  to.  —  Where  the  instrument  or  an  acceptance  or 
any  indorsement  thereon  is  dated,  such  date  is  deemed  prima  facie  to  be  the  true 
date  of  the  making,  drawing,  acceptance  or  indorsement,  as  the  case  may  be. 

§  31.  Ante-dated  and  post-dated.  —  The  instrument  is  not  invalid  for  the 
reason  only  that  it  is  ante-dated  or  post-dated,  provided  this  is  not  done  for  an 
illegal  or  fraudulent  purpose.  The  person  to  whom  an  instrument  so  dated  is 
delivered  acquires  the  title  thereto  as  of  the  date  of  delivery. 

§  32.    When  date  may  be  inserted.  —  Where  an  instrument  expressed  to  be  pay- 


NEGOTIABLE   INSTRUMENTS  1O-13 

able  at  a  fixed  period  after  date  is  issued  undated,  or  where  the  acceptance  of  an 
instrument  payable  at  a  fixed  period  after  sight  is  undated,  any  holder  may  insert 
therein  the  true  date  of  issue  or  acceptance,  and  the  instrument  shall  be  payable 
accordingly.  The  insertion  of  a  wrong  date  does  not  avoid  the  instrument  in  the 
hands  of  a  subsequent  holder  in  due  course ;  but  as  to  him,  the  date  so  inserted  is 
to  be  regarded  as  the  true  date. 

Where  an  instrument  is  not  dated,  the  holder  may  fill  in  the  date  of 
issue  if  known,  or  if  unknown  the  date  of  receipt  by  him. 

§  33.  Blanks;  when  may  be  filled.  —  Where  the  instrument  is  wanting  in  any 
material  particular,  the  person  in  possession  thereof  has  a  prima  facie  authority  to 
complete  it  by  filling  up  the  blanks  therein.  And  a  signature  on  a  blank  paper 
delivered  by  the  person  making  the  signature  in  order  that  the  paper  may  be  con- 
verted into  a  negotiable  instrument  operates  as  a  prima  facie  authority  to  fill  it  up 
as  such  for  any  amount.  In  order,  however,  that  any  such  instrument,  when  com- 
pleted, may  be  enforced  against  any  person  who  became  a  party  thereto  prior  to  its 
completion,  it  must  be  filled  up  strictly  in  accordance  with  the  authority  given  and 
within  a  reasonable  time.  But  if  any  such  instrument,  after  completion,  is  nego- 
tiated to  a  holder  in  due  course,  it  is  valid  and  effectual  for  all  purposes  in  his  hands, 
and  he  may  enforce  it  as  if  it  had  been  filled  up  strictly  in  accordance  with  the 
authority  given  and  within  a  reasonable  time. 

The  provision  as  to  filling  blanks  does  not  authorize  the  filling  in  of 
any  sums  not  intended  or  which  alter  the  character  or  legal  effect  of  the 
instrument.  The  maker  of  an  instrument  ought  not  to  leave  any  blanks 
which  might  be  fraudulently  filled  out;  clear  carelessness,  negligence  on 
the  maker's  part  in  this  matter  would  probably  serve  to  protect  a  bank 
which  paid  a  check  which  had  been  "  raised." 

§  34.  Incomplete  instrument  not  delivered.  —  Where  an  incomplete  instrument 
has  not  been  delivered  it  will  not,  if  completed  and  negotiated,  without  authority, 
be  a  valid  contract  in  the  hands  of  any  holder,  as  against  any  person  whose  signa- 
ture was  placed  thereon  before  delivery. 

§  35.  Delivery;  when  effectual;  when  presumed.  —  Every  contract  on  a  nego- 
tiable instrument  is  incomplete  and  revocable  until  delivery  of  the  instrument  for 
the  purpose  of  giving  effect  thereto.  As  between  immediate  parties,  and  as  regards 
a  remote  party  other  than  a  holder  in  due  course,  the  delivery,  in  order  to  be  effectual, 
must  be  made  either  by  or  under  the  authority  of  the  party  making,  drawing,  ac- 
cepting or  indorsing,  as  the  case  may  be ;  and  in  such  case  the  delivery  may  be 
shown  to  have  been  conditional,  or  for  a  special  purpose  only,  and  not  for  the  pur- 
pose of  transferring  the  property  in  the  instrument.  But  where  the  instrument  is 
in  the  hands  of  a  holder  in  due  course,  a  valid  delivery  thereof  by  all  parties  prior 
to  him  so  as  to  make  them  liable  to  him  is  conclusively  presumed.  And  where  the 
instrument  is  no  longer  in  the  possession  of  a  party  whose  signature  appears  thereon, 
a  valid  and  intentional  delivery  by  him  is  presumed  until  the  contrary  is  proved. 

For  transfer  of  an  instrument,  delivery  is  necessary,  and  very  com- 
monly indorsement.  When  payable  "  to  order  "  transfer  is  only  by  in- 
dorsement and  delivery.  Transfer  may  be  by  operation  of  law  as  in  case 


1O-14  NEGOTIABLE   INSTRUMENTS 

of  the  death  of  the  holder,  when  his  personal  representative  (rather  than  his 
heir)  holds  and  may  transfer.  On  the  death  of  a  partner,  the  remaining 
partners  must  all  sign  as  indorsers.  In  bankruptcy,  the  instrument  passes 
to  the  assignee  or  trustee. 

There  is  much  technicality  as  to  delivery.  Mailing  apparently  is  not 
delivery ;  the  instrument  may  never  reach  its  destination.  If  mailed  by 
request  of  some  person,  mailing  is  then  delivery  to  him ;  the  risk  of  trans- 
mission is  upon  him.  Handing  for  inspection  is  not  delivery,  nor  leaving  on 
the  desk  of  the  payee  in  his  absence,  nor  placing  in  the  hands  of  one's  own 
agent.  Delivery  on  condition  is  not  delivery  until  the  condition  is  fulfilled. 
Whether  delivery  on  Sunday  is  good  depends  upon  the  laws  of  the  State. 

Instruments  are  sometimes  placed  in  "  escrow/'  in  the  hands  of  an 
uninterested  party  with  authority  and  instructions  to  deliver  when  certain 
money  is  paid,  or  a  deed  presented,  or  some  specified  act  performed.  Plac- 
ing in  escrow  is  held  to  be  delivery  so  far  as  the  maker  is  concerned,  as  he 
has  parted  with  all  rights,  and  delivery  is  immediate  upon  the  fulfilment 
of  the  conditions,  even  if  this  occurs  after  the  death  of  the  maker. 

§  36.  Construction  where  instrument  is  ambiguous.  —  Where  the  language  of 
the  instrument  is  ambiguous,  or  there  are  omissions  therein,  the  following  rules  of 
construction  apply ; 

1.  Where  the  sum  payable  is  expressed  in  words  and  also  in  figures  and  there 
is  a  discrepancy  between  the  two,  the  sum  denoted  by  the  words  is  the  sum  payable ; 
but  if  the  words  are  ambiguous  or  uncertain,  references  may  be  had  to  the  figures 
to  fix  the  amount ; 

2.  Where  the  instrument  provides  for  the  payment  of  interest,  without  specify- 
ing the  date  from  which  interest  is  to  run,  the  interest  runs  from  the  date  of  the 
instrument,  and  if  the  instrument  is  undated,  from  the  issue  thereof ; 

3.  Where  the  instrument  is  not  dated,  it  will  be  considered  to  be  dated  as  of 
the  time  it  was  issued  ; 

4.  Where  there  is  a  conflict  between  the  written  and  printed  provisions  of  the 
instrument,  the  written  provisions  prevail ; 

5.  Where  the  instrument  is  so  ambiguous  that  there  is  doubt  whether  it  is  a 
bill  or  note,  the  holder  may  treat  it  as  either  at  his  election ; 

6.  Where  a  signature  is  so  placed  upon  the  instrument  that  it  is  not  clear  in 
what  capacity  the  person  making  the  same  intended  to  sign,  he  is  to  be  deemed  an 
indorser ; 

7.  Where  an  instrument  containing  the  words  "I  promise  to  pay"  is  signed  by 
two  or  more  persons,  they  are  deemed  to  be  jointly  and  severally  liable  thereon. 

§  37.  Liability  of  person  signing  in  trade  or  assumed  name.  —  No  person  is  liable 
on  the  instrument  whose  signature  does  not  appear  thereon,  except  as  herein 
otherwise  expressly  provided.  But  one  who  signs  in  a  trade  or  assumed  name  will 
be  liable  to  the  same  extent  as  if  he  had  signed  in  his  own  name. 

§  38.  Signature  by  agent;  authority;  how  shown.  —  The  signature  of  any 
party  may  be  made  by  a  duly  authorized  agent.  No  particular  form  of  appoint- 
ment is  necessary  for  this  purpose ;  and  the  authority  of  the  agent  may  be  estab- 
lished as  in  other  cases  of  agency. 


NEGOTIABLE   INSTRUMENTS  1O-15 

§  39.  Liability  of  person  signing  as  agent.  —  Where  the  instrument  contains 
or  a  person  adds  to  his  signature  words  indicating  that  he  signs  for  or  on  behalf 
of  a  principal,  or  in  a  representative  capacity,  he  is  not  liable  on  the  instrument 
if  he  was  duly  authorized;  but  the  mere  addition  of  words  describing  him  as 
an  agent,  or  as  filling  a  representative  character,  without  disclosing  his  principal, 
does  not  exempt  him  from  personal  liability. 

§  40.  Signature  by  procuration;  effect  of. — A  signature  by  "procuration" 
operates  as  notice  that  the  agent  has  but  a  limited  authority  to  sign,  and  the 
principal  is  bound  only  in  case  the  agent  in  so  signing  acted  within  the  actual 

limits  of  his  authority. 

i 

Agency  by  "  procuration  "  may  be  defined  as  express,  formal  agency 
for  specific  purposes,  and  those  dealing  with  such  an  agent  should  know 
the  range  or  limits  of  bis  authority. 

§  41.  Effect  of  indorsement  by  infant  or  corporation.  —  The  indorsement  or 
assignment  of  the  instrument  by  a  corporation  or  by  an  infant  passes  the  property 
therein,  notwithstanding  that  from  want  of  capacity  the  corporation  or  infant  may 
incur  no  liability  thereon. 

§  42.  Forged  signature;  effect  of.  —  Where  a  signature  is]  forged  or  made  with- 
out authority  of  the  person  whose  signature  it  purports  to  be,  it  is  wholly  inopera- 
tive, and  no  right  to  retain  the  instrument,  or  to  give  a  discharge  therefor,  or  to 
enforce  payment  thereof  against  any  party  thereto,  can  be  acquired  through  or 
under  such  signature,  unless  the  party  against  whom  it  is  sought  to  enforce  such 
right  is  precluded  from  setting  up  the  forgery  or  want  of  authority. 

Forgery  includes,  in  addition  to  signing  another's  name,  changing  any 
material  part  of  a  writing  or  adding  anything  changing  its  effect.  It  is 
also  forgery  to  obtain  the  signature  of  a  blind  or  illiterate  person  by  false 
reading  to  him.  This  section,  however,  refers  only  to  the  case  of  a  forged 
signature.  An  instrument  must  be  valid  when  issued.  It  is  the  business 
of  a  bank  to  know  the  signature  of  its  customer,  and  the  bank  stands  the 
loss  on  a  check  paid  by  it  if  the  signature  be  forged.  Alterations  in  an 
instrument  are  on  a  different  basis  and  are  referred  to  in  Section  206. 
While  one  person  may  be  authorized  to  sign  for  another,  there  should  be 
adequate  evidence  of  such  authorization ;  otherwise  it  will  be  considered 
forgery,  and  the  burden  of  proof  is  on  the  signer. 

ARTICLE  XII 

ACCEPTANCE 

§  220.  Acceptance;  how  made.  —  The  acceptance  of  a  bill  is  the  signification 
by  the  drawee  of  his  assent  to  the  order  of  the  drawer.  The  acceptance  must  be 
in  writing  and  signed  by  the  drawee.  It  must  not  express  that  the  drawee  will  per- 
form his  promise  by  any  other  means  than  the  payment  of  money. 

§  221.  Holder  entitled  to  acceptance  on  face  of  bill.  —  The  holder  of  a  bill  pre- 
senting the  same  for  acceptance  may  require  that  the  acceptance  be  written  on  the 
bill,  and  if  such  request  is  refused,  may  treat  the  bill  as  dishonored. 


1O-16  NEGOTIABLE   INSTRUMENTS 

§  222.  Acceptance  by  separate  instrument.  —  Where  an  acceptance  is  written  on  a 
paper  other  than  the  bill  itself,  it  does  not  bind  the  acceptor,  except  in  favor  of  a  per- 
son to  whom  it  was  shown  and  who,  on  the  faith  thereof,  receives  the  bill  for  value. 

§  223.  Promise  to  accept;  when  equivalent  to  acceptance. — An  unconditional 
promise  in  writing  to  accept  a  bill  before  it  is  drawn  is  deemed  an  actual  accept- 
ance in  favor  of  every  person  who,  upon  the  faith  thereof,  receives  the  bill  for  value. 

§  224.  Time  allowed  drawee  to  accept.  —  The  drawee  is  allowed  twenty-four 
hours  after  presentment  in  which  to  decide  whether  or  not  he  will  accept  the  bill ; 
but  the  acceptance  if  given  dates  as  of  the  day  of  presentation. 

§  225.  Liability  of  drawee  retaining  or  destroying  bill.  —  Where  a  drawee  to 
whom  a  bill  is  delivered  for  acceptance  destroys  the  same,  or  refuses  within  twenty- 
four  hours  after  such  delivery,  or  within  such  other  period  as  the  holder  may  allow, 
to  return  the  bill  accepted  or  non-accepted  to  the  holder,  he  will  be  deemed  to  have 
accepted  the  same. 

§  226.  Acceptance  of  incomplete  bill.  —  A  bill  may  be  accepted  before  it  has 
been  signed  by  the  drawer,  or  while  otherwise  incomplete,  or  when  it  is  overdue, 
or  after  it  has  been  dishonored  by  a  previous  refusal  to  accept,  or  by  non-payment. 
But  when  a  bill  payable  after  sight  is  dishonored  by  non-acceptance  and  the  drawee 
subsequently  accepts  it,  the  holder,  in  the  absence  of  any  different  agreement,  is 
entitled  to  have  the  bill  accepted  as  of  the  date  of  the  first  presentment. 

§  227.  Kinds  of  acceptances.  —  An  acceptance  is  either  general  or  qualified. 
A  general  acceptance  assents  without  qualification  to  the  order  of  the  drawer.  A 
qualified  acceptance  in  express  terms  varies  the  effect  of  the  bill  as  drawn. 

§  228.  What  constitutes  a  general  acceptance.  —  An  acceptance  to  pay  at  a  par- 
ticular place  is  a  general  acceptance  unless  it  expressly  states  that  the  bill  is  to  be 
paid  there  only  and  not  elsewhere. 

§  229.    Qualified  acceptance.  —  An  acceptance  is  qualified  which  is : 

1.  Conditional,  that  is  to  say,  which  makes  payment  by  the  acceptor  dependent 
on  the  fulfillment  of  a  condition  therein  stated ; 

2.  Partial,  that  is  to  say,  an  acceptance  to  pay  part  only  of  the  amount  for 
which  the  bill  is  drawn ; 

3.  Local,  that  is  to  say,  an  acceptance  to  pay  only  at  a  particular  place ; 

4.  Qualified  as  to  time ; 

5.  The  acceptance  of  some  one  or  more  of  the  drawees,  but  not  of  all. 

§  230.  Rights  of  parties  as  to  qualified  acceptance.  —  The  holder  may  refuse  to 
take  a  qualified  acceptance,  and  if  he  does  not  obtain  an  unqualified  acceptance, 
he  may  treat  the  bill  as  dishonored  by  non-acceptance.  Where  a  qualified  accept- 
ance is  taken,  the  drawer  and  indorsers  are  discharged  from  liability  on  the  bill, 
unless  they  have  expressly  or  impliedly  authorized  the  holder  to  take  a  qualified 
acceptance,  or  subsequently  assent  thereto.  When  the  drawer  or  an  indorser 
receives  notice  of  a  qualified  acceptance,  he  must  within  a  reasonable  time  express 
his  dissent  to  the  holder,  or  he  will  be  deemed  to  have  assented  thereto. 


ARTICLE   XIII 

PRESENTMENT  FOB  ACCEPTANCE 

§  240.    When  presentment  for  acceptance  must  be  made.  —  Presentment  for 
acceptance  must  be  made : 

1.   Where  the  bill  is  payable  after  sight  or  in  any  other  case  where  present- 


NEGOTIABLE   INSTRUMENTS  1C— 17 

ment  for  acceptance  is  necessary  in  order  to  fix  the   maturity  of  the  instru- 
ment; or 

2.  Where  the  bill  expressly  stipulates  that  it  shall  be  presented  for  accept- 
ance; or 

3.  Where  the  bill  is  drawn  payable  elsewhere  than  at  the  residence  or  place 
of  business  of  the  drawee. 

In  no  other  case  is  presentment  for  acceptance  necessary  in  order  to  render 
any  party  to  the  bill  liable. 

§  241.  When  failure  to  present  releases  drawer  and  indorser.  —  Except  as  herein 
otherwise  provided,  the  holder  of  a  bill  which  is  required  by  the  next  preceding 
section  to  be  presented  for  acceptance  must  either  present  it  for  acceptance  or  nego- 
tiate it  within  a  reasonable  time.  If  he  fails  to  do  so,  the  drawer  and  all  indorsers 
are  discharged. 

§  242.  Presentment ;  how  made.  —  Presentment  for  acceptance  must  be  made 
by  or  on  behalf  of  the  holder  at  a  reasonable  hour,  on  a  business  day,  and  before  the 
bill  is  overdue,  to  the  drawee  or  some  person  authorized  to  accept  or  refuse  accept- 
ance on  his  behalf ;  and 

1.  Where  a  bill  is  addressed  to  two  or  more  drawees  who  are  not  partners, 
presentment  must  be  made  to  them  all,  unless  one  has  authority  to  accept  or  refuse 
acceptance  for  all,  in  which  case  presentment  may  be  made  to  him  only ; 

2.  Where  the  drawee  is  dead,  presentment  may  be  made  to  his  personal  rep- 
resentative ; 

3.  Where  the  drawee  has  been  adjudged  a  bankrupt  or  an  insolvent,  or  has 
made  an  assignment  for  the  benefit  of  creditors,  presentment  may  be  made  to  him 
or  to  his  trustee  or  assignee. 

§  243.  On  what  days  presentment  may  be  made.  —  A  bill  may  be  presented  for 
acceptance  on  any  day  on  which  negotiable  instruments  may  be  presented  for  pay- 
ment under  the  provisions  of  sections  one  hundred  and  thirty-two  and  one  hundred 
and  forty-five  of  this  chapter.  When  Saturday  is  not  otherwise  a  holiday,  present- 
ment for  acceptance  may  be  made  before  twelve  o'clock  noon  on  that  day. 

§  244.  Presentment  when  time  is  insufficient.  —  Where  the  holder  of  a  bill 
drawn  payable  elsewhere  than  at  the  place  of  business  or  the  residence  of  the  drawee 
has  riot  time  with  the  exercise  of  reasonable  diligence  to  present  the  bill  for  accept- 
ance before  presenting  it  for  payment  on  the  day  that  it  falls  due,  the  delay  caused 
by  presenting  the  bill  for  acceptance  before  presenting  it  for  payment  is  excused  and 
does  not  discharge  the  drawers  and  indorsers. 

§  245.  Where  presentment  is  excused.  —  Presentment  for  acceptance  is  excused 
and  a  bill  may  be  treated  as  dishonored  by  non-acceptance  in  either  of  the  following 
cases : 

1.  Where  the  drawee  is  dead  or  has  absconded,  or  is  a  fictitious  person  or  a 
person  not  having  capacity  to  contract  by  bill; 

2.  Where  after  the  exercise  of  reasonable  diligence,   presentment  cannot  be 
made; 

3.  Where,  although  presentment  has  been  irregular,  acceptance  has  been  re- 
fused on  some  other  ground. 

§  246.  When  discharged  by  non-acceptance.  —  A  bill  is  dishonored  by  non- 
acceptance  : 

1.  When  it  is  duly  presented  for  acceptance,  and  such  an  acceptance  as  is  pre- 
scribed by  this  act  is  refused  or  cannot  be  obtained;    or 

2.  When  presentment  for  acceptance  is  excused  and  the  bill  is  not  accepted. 


1O-18  NEGOTIABLE   INSTRUMENTS 

§  247.  Duty  of  holder  where  bill  not  accepted.  —  Where  a  bill  is  duly  presented 
for  acceptance  and  is  not  accepted  within  the  prescribed  time,  the  person  present- 
ing it  must  treat  the  bill  as  dishonored  by  non-acceptance  or  he  loses  the  right  of 
recourse  against  the  drawer  and  indorsers. 

§  248.  Rights  of  holder  where  bill  not  accepted.  —  When  a  bill  is  dishonored  by 
non-acceptance,  an  immediate  right  of  recourse  against  the  drawers  and  indorsers 
accrues  to  the  holder  and  no  presentment  for  payment  is  necessary. 

ARTICLE  IV 

CONSIDERATION 

§  50.  Presumption  of  consideration.  —  Every  negotiable  instrument  is  deemed 
prima  facie  to  have  been  issued  for  a  valuable  consideration ;  and  every  person 
whose  signature  appears  thereon  to  have  become  a  party  thereto  for  value. 

§  51.  What  constitutes  consideration.  —  Value  is  any  consideration  sufficient 
to  support  a  simple  contract.  An  antecedent  or  pre-existing  debt  constitutes 
value ;  and  is  deemed  such  whether  the  instrument  is  payable  on  demand  or  at  a 
future  time. 

§  52.  What  constitutes  holder  for  value.  —  Where  value  has  at  any  time  been 
given  for  the  instrument,  the  holder  is  deemed  a  holder  for  value  in  respect  to  all 
parties  who  became  such  prior  to  that  time. 

§  53.  When  lien  on  instrument  constitutes  holder  for  value.  —  Where  the  holder 
has  a  lien  on  the  instrument,  arising  either  from  contract  or  by  implication  of  law, 
he  is  deemed  a  holder  for, value  to  the  extent  of  his  lien. 

§  54.  Effect  of  want  of  consideration.  —  Absence  or  failure  of  consideration  is 
matter  of  defense  as  against  any  person  not  a  holder  in  due  course ;  and  partial 
failure  of  consideration  is  a  defense  pro  tanto,  whether  the  failure  is  an  ascertained 
and  liquidated  amount  or  otherwise. 

While  consideration  need  not  be  expressed,  yet  between  the  immediate 
parties  a  lack  or  a  failure  of  consideration  will  prevent  recovery.  This 
does  not  apply,  however,  to  holders  in  due  course. 

§  55.  Liability  of  accommodation  party.  —  An  accommodation  party  is  one  who 
has  signed  the  instrument  as  maker,  drawer,  acceptor  or  indorser,  without  receiv- 
ing value  therefor,  and  for  the  purpose  of  lending  his  name  to  some  other  person. 
Such  a  person  is  liable  on  the  instrument  to  a  holder  for  value,  notwithstanding 
such  holder  at  the  time  of  taking  the  instrument  knew  him  to  be  only  an  accommo- 
dation party. 

ARTICLE   V 

NEGOTIATION 

§  60.  What  constitutes  negotiation.  —  An  instrument  is  negotiated  when  it  is 
transferred  from  one  person  to  another  in  such  manner  as  to  constitute  the  trans- 
feree the  holder  thereof.  If  payable  to  bearer  it  is  negotiated  by  delivery ;  if  pay- 
able to  order  it  is  negotiated  by  the  indorsement  of  the  holder  completed  by  delivery. 

Transfer  of  negotiable  paper  ordinarily  carries  collateral  with  it.  This 
is  true  except  for  trust  deeds  and  mortgages,  and  perhaps  for  these ;  they 


NEGOTIABLE   INSTRUMENTS  1C— 19 

ought,  however,  to  be  transferred  by  a  separate  and  adequate  paper  of 
transfer. 

§  61.  Indorsement;  how  made.  —  The  indorsement  must  be  written  on  the 
instrument  itself  or  upon  a  paper  attached  thereto.  The  signature  of  the  indorser, 
without  additional  words,  is  a  sufficient  indorsement. 

§  62.  Indorsement  must  be  of  entire  instrument.  —  The  indorsement  must  be 
an  indorsement  of  the  entire  instrument.  An  indorsement,  which  purports  to 
transfer  to  the  indorsee  a  part  only  of  the  amount  payable,  or  which  purports  to 
transfer  the  instrument  to  two  or  more  indorsees  severally,  does  not  operate  as  a 
negotiation  of  the  instrument.  But  where  the  instrument  has  been  paid  in  part, 
it  may  be  indorsed  as  to  the  residue. 

§  63.  Kinds  of  indorsement.  —  An  indorsement  may  be  either  special  or  in 
blank ;  and  it  may  also  be  either  restrictive  or  qualified,  or  conditional. 

§  64.  Special  indorsement;  indorsement  in  blank. — A  special  indorsement 
specifies  the  person  to  whom,  or  to  whose  order  the  instrument  is  to  be  payable ; 
and  the  indorsement  of  such  indorsee  is  necessary  to  the  further  negotiation  of  the 
instrument.  An  indorsement  in  blank  specifies  no  indorsee,  and  an  instrument  so 
indorsed  is  payable  to  bearer,  and  may  be  negotiated  by  delivery. 

§  65.  Blank  indorsement;  how  changed  to  special  indorsement.  —  The  holder 
may  convert  a  blank  indorsement  into  a  special  indorsement  by  writing  over  the 
signature  of  the  indorser  in  blank  any  contract  consistent  with  the  character  of  the 
indorsement. 

The  holder  may  thus  avoid  being  an  indorser  unless  the  new  holder 
requires  his  indorsement,  which,  however,  he  is  likely  to  do  in  most  cases. 

§  66.  When  indorsement  restrictive.  —  An  indorsement  is  restrictive,  which 
either : 

1.  Prohibits  the  further  negotiation  of  the  instrument ;   or 

2.  Constitutes  the  indorsee  the  agent  of  the  indorser ;    or 

3.  Vests  the  title  in  the  indorsee  in  trust  for  or  to  the  use  of  some  other  person. 
But  the  mere  absence  of  words  implying  power  to  negotiate  does  not  make  an 

indorsement  restrictive. 

§  67.  Effect  of  restrictive  indorsement;  rights  of  indorsee.  —  A  restrictive  in- 
dorsement confers  upon  the  indorsee  the  right : 

1.  To  receive  payment  of  the  instrument ; 

2.  To  bring  any  action  thereon  that  the  indorser  could  bring ; 

3.  To  transfer  his  rights  as  such  indorsee,  where  the  form  of  the  indorsement 
authorizes  him  to  do  so. 

But  all  subsequent  indorsees  acquire  only  the  title  of  the  first  indorsee  under 
the  restrictive  indorsement. 

§  68.  Qualified  indorsement.  —  A  qualified  indorsement  constitutes  the  in- 
dorser a  mere  assignor  of  the  title  to  the  instrument.  It  may  be  made  by  adding 
to  the  indorser 's  signature  the  words  "without  recourse"  or  any  words  of  similar 
import.  Such  an  indorsement  does  not  impair  the  negotiable  character  of  the 
instrument. 

§  69.  Conditional  indorsement.  —  Where  an  indorsement  is  conditional,  a  party 
required  to  pay  the  instrument  may  disregard  the  condition  and  make  payment  to 
the  indorsee  or  his  transferee,  whether  the  condition  has  been  fulfilled  or  not.  But 


1C—  20  NEGOTIABLE  INSTRUMENTS 

any  person  to  whom  an  instrument  so  indorsed  is  negotiated  will  hold  the  same,  or 
the  proceeds  thereof,  subject  to  the  rights  of  the  person  indorsing  conditionally. 

Various  conditions  may  be  imposed  in  the  indorsement,  and  it  is  pos- 
sible that  the  form  of  indorsement  may  make  a  paper  non-negotiable  if 
sufficiently  restricted.  Indorsement  then  may  be  in  various  forms  and 
with  different  effects. 

A  simple  indorsement  in  blank 


has  the  effect  of  "  pay  to  bearer." 

to 


restricts  the  payment. 


conveys  or  transfers,  but  does  not  guarantee  title. 

lOHLidm, 


restricts  payment  to  William  Kane. 

to 


does  not  require  identification  of  bearer,  so  that  any  one  who  gains  posses- 
sion of  it  even  unlawfully  will  probably  succeed  in  having  it  cashed  if  it 
is  a  check. 

Some  banks  require  the  signature  of  the  person  to  whom  a  check  is 
paid,  even  when  payable  "  to  bearer  "  ;  the  bank  wants  to  have  a  record 
of  who  the  "  bearer  "  is,  as  stated  under  §  28. 

to 


% 


is  a  less  common  form  of  indorsement;  it  secures  for  the  maker  the 
signature  of  the  payee,  but  does  not  hold  the  bank  responsible  for  the  sig- 
nature nor  require  identification. 


NEGOTIABLE   INSTRUMENTS  1O-21 

to 


does  not  allow  the  use  by  George  Parkes  of  this  money  for  purely  personal 
purposes,  and  probably  imposes  liability  upon  the  society  of  which  he  is 
secretary. 

to-  tfe  (yidzi;  o    ha/nAdi 


has  a  similar  effect,  as  has  also 

to 


Where  a  check  is  made  payable  "  settlement  in  full  "  or  "  in  full  satis- 
faction "  of  a  transaction,  the  payee  may  cash  the  check  and  sue  for  the 
additional  amount,  provided  the  larger  sum  was  an  agreed  sum;  but  if 
in  payment  of  a  disputed  sum,  the  cashing  of  the  check  settles  the  account. 
Evidence  that  the  larger  sum  was  agreed  upon  may  be  an  important  factor 
in  such  a  transaction. 

§  70.  Indorsement  of  instrument  payable  to  bearer.  —  Where  an  instrument, 
payable  to  bearer,  is  indorsed  specially,  it  may  nevertheless  be  further  negotiated 
by  delivery  ;  but  the  person  indorsing  specially  is  liable  as  indorser  to  only  such 
holders  as  make  title  through  his  indorsement. 

§  71.  Indorsement  where  payable  to  two  or  more  persons.  —  Where  an  instru- 
ment is  payable  to  the  order  of  two  or  more  payees  or  indorsees  who  are  not  part- 
ners, all  must  indorse,  unless  the  one  indorsing  has  authority  to  indorse  for  the 
others. 

§  72.  Effect  of  instrument  drawn  or  indorsed  to  a  person  as  cashier.  —  Where 
an  instrument  is  drawn  or  indorsed  to  a  person  as  "cashier"  or  other  fiscal  officer 
of  a  bank  or  corporation,  it  is  deemed  prima  facie  to  be  payable  to  the  bank  or  cor- 
poration of  which  he  is  such  officer  ;  and  may  be  negotiated  by  either  the  indorse- 
ment of  the  bank  or  corporation,  or  the  indorsement  of  the  officer. 

§  73.  Indorsement  where  name  is  misspelled.  —  Where  the  name  of  a  payee  or 
indorsee  is  wrongly  designated  or  misspelled,  he  may  indorse  the  instrument  as 
therein  described,  adding,  if  he  think  fit,  his  proper  signature. 

Where  a  check  or  other  instrument  is  made  or  indorsed  to  the  order 
of  A,  it  is  required  that  A  shall  indorse  in  the  precise  form  indicated, 
although  this  may  not  be  his  correct  name  or  not  his  usual  form  of  name. 
If  a  check  is  to  be  deposited  in  a  bank,  it  should  be  again  indorsed  in  the 


1O-22  NEGOTIABLE   INSTRUMENTS 

form  in  which  the  account  stands.     The  use  of  rubber  stamps  for  such 
indorsement  is  widespread  and  legal. 

§  74.  Indorsement  in  representative  capacity.  —  Where  any  person  is  under 
obligation  to  indorse  in  a  representative  capacity,  he  may  indorse  in  such  terms  as 
to  negative  personal  liability. 

§  75.  Time  of  indorsement;  presumption.  —  Except  where  an  indorsement 
bears  date  after  the  maturity  of  the  instrument,  every  negotiation  is  deemed  prima 
facie  to  have  been  effected  before  the  instrument  was  overdue. 

§  76.  Place  of  indorsement;  presumption.  —  Except  where  the  contrary  ap- 
pears every  indorsement  is  presumed  prima  facie  to  have  been  made  at  the  place 
where  the  instrument  is  dated. 

§  77.  Continuation  of  negotiable  character.  —  An  instrument  negotiable  in  its 
origin  continues  to  be  negotiable  until  it  has  been  restrictively  indorsed  or  dis- 
charged by  payment  or  otherwise. 

§  78.  Striking  out  indorsement.  —  The  holder  may  at  any  time  strike  out  any 
indorsement  which  is  not  necessary  to  his  title.  The  indorser  whose  indorsement  is 
struck  out,  and  all  indorsers  subsequent  to  him,  are  thereby  relieved  from  liability 
on  the  instrument. 

§  79.  Transfer  without  indorsement ;  effect  of.  —  Where  the  holder  of  an  instru- 
ment payable  to  his  order  transfers  it  for  value  without  indorsing  it,  the  transfer 
vests  in  the  transferee  such  title  as  the  transferrer  had  therein,  and  the  transferee 
acquires,  in  addition,  the  right  to  have  the  indorsement  of  the  transferrer.  But 
for  the  purpose  of  determining  whether  the  transferee  is  a  holder  in  due  course,  the 
negotiation  takes  effect  as  of  the  time  when  the  indorsement  is  actually  made. 

§  80.  When  prior  party  may  negotiate  instrument.  —  Where  an  instrument  is 
negotiated  back  to  a  prior  party,  such  party  may,  subject  to  the  provisions  of  this 
act,  reissue  and  further  negotiate  the  same.  But  he  is  not  entitled  to  enforce  pay- 
ment thereof  against  any  intervening  party  to  whom  he  was  personally  liable. 

ARTICLE  VI 

RIGHTS    OF    HOLDER 

§  90.  Right  of  holder  to  sue;  payment.  —  The  holder  of  a  negotiable  instru- 
ment may  sue  thereon  in  his  own  name ;  and  payment  to  him  in  due  course  dis- 
charges the  instrument. 

§  91.  What  constitutes  a  holder  in  due  course.  — A  holder  in  due  course  is  a 
holder  who  has  taken  the  instrument  under  the  following  conditions : 

1.  That  it  is  complete  and  regular  upon  its  face ; 

2.  That  he  became  the  holder  of  it  before  it  was  overdue,  and  without  notice 
that  it  had  been  previously  dishonored,  if  such  were  the  fact ; 

3.  That  he  took  it  in  good  faith  and  for  value ; 

4.  That  at  the  time  it  was  negotiated  to  him  he  had  no  notice  of  any  infirmity 
in  the  instrument  or  defect  in  the  title  of  the  person  negotiating  it. 

§  92.  When  person  not  deemed  holder  in  due  course.  —  Where  an  instrument 
payable  on  demand  is  negotiated  an  unreasonable  length  of  time  after  its  issue, 
the  holder  is  not  deemed  a  holder  in  due  course. 

§  93.  Notice  before  full  amount  paid.  —  Where  the  transferee  receives  notice 
of  any  infirmity  in  the  instrument  or  defect  in  the  title  of  the  person  negotiating 
the  same  before  he  has  paid  the  full  amount  agreed  to  be  paid  therefor,  he  will  be 


NEGOTIABLE   INSTRUMENTS  1C— 23 

deemed  a  holder  in  due  course  only  to  the  extent  of  the  amount  theretofore  paid 
by  him. 

§  94.  When  title  defective.  —  The  title  of  a  person  who  negotiates  an  instrument 
is  defective  within  the  meaning  of  this  act  when  he  obtained  the  instrument,  or  any 
signature  thereto,  by  fraud,  duress,  or  force  and  fear,  or  other  unlawful  means,  or 
for  an  illegal  consideration,  or  when  he  negotiates  it  in  breach  of  faith,  or  under 
such  circumstances  as  amount  to  a  fraud. 

§  95.  What  constitutes  notice  of  defect.  —  To  constitute  notice  of  an  infirmity 
in  the  instrument  or  defect  in  the  title  of  the  person  negotiating  the  same,  the  per- 
son to  whom  it  is  negotiated  must  have  had  actual  knowledge  of  the  infirmity  or 
defect,  or  knowledge  of  such  facts  that  his  action  in  taking  the  instrument  amounted 
to  bad  faith. 

§  96.  Rights  of  holder  in  due  course.  —  A  holder  in  due  course  holds  the  in- 
strument free  from  any  defect  of  title  of  prior  parties  and  free  from  defenses  avail- 
able to  prior  parties  among  themselves,  and  may  enforce  payment  of  the  instru- 
ment for  the  full  amount  thereof  against  all  parties  liable  thereon. 

An  "  innocent  purchaser  for  value  "  or  "  holder  in  due  course  "  cannot 
hold  against  a  real  defense  such  as : 

Incapacity  to  contract. 

Illegality,  including  usury  and  gambling. 

Forgery,  in  which  is  included  alteration. 

Extinguishment. 

Although  the  maker  may  be  free  in  such  a  case,  the  indorser  may 
sometimes  be  held.  Any  indorser  later  than  the  commission  of  the  fault 
is  liable  to  later  holders. 

If  a  maker  or  drawer  has  delivered  an  instrument  to  an  impostor  he  is 
liable  as  against  a  "  holder  in  due  course  " ;  he  pays  for  his  negligence. 

§  97.  When  subject  to  original  defenses.  —  In  the  hands  of  any  holder  other 
than  a  holder  in  due  course,  a  negotiable  instrument  is  subject  to  the  same  defenses 
as  if  it  were  non-negotiable.  But  a  holder  who  derives  his  title  through  a  holder 
in  due  course,  and  who  is  not  himself  a  party  to  any  fraud  or  illegality  affecting  the 
instrument,  has  all  the  rights  of  such  former  holder  in  respect  of  all  parties  prior  to 
the  latter. 

§  98.  Who  deemed  holder  in  due  course.  —  Every  holder  is  deemed  prima  facie 
to  be  a  holder  in  due  course ;  but  when  it  is  shown  that  the  title  of  any  person  who 
has  negotiated  the  instrument  was  defective,  the  burden  is  on  the  holder  to  prove 
that  he  or  some  person  under  whom  he  claims  acquired  the  title  as  a  holder  in  due 
course.  But  the  last-mentioned  rule  does  not  apply  in  favor  of  a  party  who  be- 
came bound  on  the  instrument  prior  to  the  acquisition  of  such  defective  title. 

ARTICLE   VII 

LIABILITIES    OF    PARTIES 

§  110.  Liability  of  maker.  —  The  maker  of  a  negotiable  instrument  by  making 
it  engages  that  he  will  pay  it  according  to  its  tenor ;  and  admits  the  existence  of 
the  payee  and  his  then  capacity  to  indorse. 


1C— 24  NEGOTIABLE   INSTRUMENTS 

§  111.  Liability  of  drawer.  —  The  drawer  by  drawing  the  instrument  admits 
the  existence  of  the  payee  and  his  then  capacity  to  indorse ;  and  engages  that  on 
due  presentment  the  instrument  will  be  accepted  and  paid,  or  both,  according  to 
its  tenor,  and  that  if  it  be  dishonored  and  the  necessary  proceedings  on  dishonor 
be  duly  taken,  he  will  pay  the  amount  thereof  to  the  holder,  or  to  any  subsequent 
indorser  who  may  be  compelled  to  pay  it.  But  the  drawer  may  insert  in  the  in- 
strument an  express  stipulation  negativing  or  limiting  his  own  liability  to  the 
holder. 

§  112.  Liability  of  acceptor.  —  The  acceptor  by  accepting  the  instrument  en- 
gages that  he  will  pay  it  according  to  the  tenor  of  his  acceptance ;  and  admits : 

1.  The  existence  of  the  drawer,  the  genuineness  of  his  signature,  and  his 
capacity  and  authority  to  draw  the  instrument ;   and 

2.  The  existence  of  the  payee  and  his  then  capacity  to  indorse. 

§  113.  When  person  deemed  indorser.  —  A  person  placing  his  signature  upon 
an  instrument  otherwise  than  as  maker,  drawer  or  acceptor  is  deemed  to  be  an 
indorser,  unless  he  clearly  indicates  by  appropriate  words  his  intention  to  be  bound 
in  some  other  capacity. 

§  114.  Liability  of  irregular  indorser.  —  Where  a  person,  not  otherwise  a  party 
to  an  instrument,  places  thereon  his  signature  in  blank  before  delivery,  he  is  liable 
as  indorser  in  accordance  with  the  following  rules : 

1.  If  the  instrument  is  payable  to  the  order  of  a  third  person,  he  is  liable  to 
the  payee  and  to  all  subsequent  parties. 

2.  If  the  instrument  is  payable  to  the  order  of  the  maker  or  drawer,  or  is  pay- 
able to  bearer,  he  is  liable  to  all  parties  subsequent  to  the  maker  or  drawer. 

3.  If  he  signs  for  the  accommodation  of  the  payee,  he  is  liable  to  all  parties  sub- 
sequent to  the  payee. 

§  115.  Warranty,  where  negotiation  by  delivery,  et  cetera.  —  Every  person  nego- 
tiating an  instrument  by  delivery  or  by  a  qualified  indorsement,  warrants : 

1.  That  the  instrument  is  genuine  and  in  all  respects  what  it  purports  to  be ; 

2.  That  he  has  a  good  title  to  it ; 

3.  That  all  prior  parties  had  capacity  to  contract ; 

4.  That  he  has  no  knowledge  of  any  fact  which  would  impair  the  validity  of 
the  instrument  or  render  it  valueless. 

But  when  the  negotiation  is  by  delivery  only,  the  warranty  extends  in  favor  of 
no  holder  other  than  the  immediate  transferee.  The  provisions  of  subdivision 
three  of  this  section  do  not  apply  to  persons  negotiating  public  or  corporate  securi- 
ties, other  than  bills  and  notes. 

§  116.  Liability  of  general  indorser.  —  Every  indorser  who  indorses  without 
qualification,  warrants  to  all  subsequent  holders  in  due  course  : 

1.  The  matter  and  things  mentioned  in  subdivisions  one,  two  and  three  of  the 
next  preceding  section ;   and 

2.  That  the  instrument  is  at  the  time  of  his  indorsement  valid  and  subsisting. 
And,  in  addition,  he  engages  that  on  due  presentment,  it  shall  be  accepted  or 

paid,  or  both,  as  the  case  may  be,  according  to  its  tenor,  and  that  if  it  be  dishonored, 
and  the  necessary  proceedings  on  dishonor  be  duly  taken,  he  will  pay  the  amount 
thereof  to  the  holder,  or  to  any  subsequent  indorser  who  may  be  compelled  to  pay  it. 

§  117.  Liability  of  indorser  where  paper  negotiable  by  delivery.  —  Where  a  per- 
son places  his  indorsement  on  an  instrument  negotiable  by  delivery  he  incurs  all 
the  liabilities  of  an  indorser. 

§  118.   Order  in  which  indorser  s  are  liable.  —  As  respects  one  another,  indorsers 


NEGOTIABLE   INSTRUMENTS  1O-25 

are  liable  prima  facie  in  the  order  in  which  they  indorse ;  but  evidence  is  admissible 
to  show  that  as  between  or  among  themselves  they  have  agreed  otherwise.  Joint 
payees  or  joint  indorsees  who  indorse  are  deemed  to  indorse  jointly  and  severally. 
§  119.  Liability  of  agent  or  broker.  —  Where  a  broker  or  other  agent  negotiates 
an  instrument  without  indorsement,  he  incurs  all  the  li abilities  prescribed  by  sec- 
tion one  hundred  and  fifteen  of  this  chapter,  unless  he  discloses  the  name  of  his 
principal,  and  the  fact  that  he  is  acting  only  as  agent. 


ARTICLE   VIII 

PRESENTMENT   FOB   PAYMENT 

§  130.  Effect  of  want  of  demand  on  principal  debtor.  —  Presentment  for  payment 
is  not  necessary  in  order  to  charge  the  person  primarily  liable  on  the  instrument ; 
but  if  the  instrument  is,  by  its  terms,  payable  at  a  special  place,  and  he  is  able  and 
willing  to  pay  it  there  at  maturity  and  has  funds  there  available  for  that  purpose, 
such  ability  and  willingness  are  equivalent  to  a  tender  of  payment  upon  his  part. 
But  except  as  herein  otherwise  provided,  presentment  for  payment  is  necessary  in 
order  to  charge  the  drawer  and  indorsers. 

§  131.  Presentment  where  instrument  is  not  payable  on  demand.  —  Where  the 
instrument  is  not  payable  on  demand,  presentment  must  be  made  on  the  day  it 
falls  due.  Where  it  is  payable  on  demand,  presentment  must  be  made  within  a 
reasonable  time  after  its  issue,  except  that  in  case  of  a  bill  of  exchange,  presentment 
for  payment  will  be  sufficient  if  made  within  a  reasonable  time  after  the  last  nego- 
tiation thereof. 

§  132.  What  constitutes  a  sufficient  presentment.  —  Presentment  for  payment, 
to  be  sufficient,  must  be  made : 

1.  By  the  holder,  or  by  some  person  authorized  to  receive  payment  on  his 
behalf; 

2.  At  a  reasonable  hour  on  a  business  day ; 

3.  At  a  proper  place  as  herein  defined ; 

4.  To  the  person  primarily  liable  on  the  instrument,  or  if  he  is  absent  or  in- 
accessible, to  any  person  found  at  the  place  where  the  presentment  is  made. 

§  133.  Place  of  presentment.  —  Presentment  for  payment  is  made  at  the 
proper  place: 

»      1.   Where  a  place  of  payment  is  specified  in  the  instrument  and  it  is  there  pre- 
sented ; 

2.  Where  no  place  of  payment  is  specified,  but  the  address  of  the  person  to 
make  payment  is  given  in  the  instrument  and  it  is  there  presented ; 

3.  Where  no  place  of  payment  is  specified  and  no  address  is  given  and  the 
instrument  is  presented  at  the  usual  place  of  business  or  residence  of  the  person  to 
make  payment. 

4.  In  any  other  case  if  presented  to  the  person  to  make  payment  wherever  he 
can  be  found,  or  if  presented  at  his  last  known  place  of  business  or  residence. 

§  134.  Instrument  must  be  exhibited.  —  The  instrument  must  be  exhibited  to 
the  person  from  whom  payment  is  demanded,  and  when  it  is  paid  must  be  delivered 
up  to  the  party  paying  it. 

§  135.  Presentment  where  instrument  payable  at  bank.  —  Where  the  instrument 
is  payable  at  a  bank,  presentment  for  payment  must  be  made  during  banking  hours, 
unless  the  person  to  make  payment  has  no  funds  there  to  meet  it  at  any  time  during 


1O-26  NEGOTIABLE   INSTRUMENTS 

the  day,  in  which  case  presentment  at  any  hour  before  the  bank  is  closed  on  that 
day  is  sufficient. 

§  136.  Presentment  where  principal  debtor  is  dead.  —  Where  the  person  pri- 
marily liable  on  the  instrument  is  dead,  and  no  place  of  payment  is  specified,  pre- 
sentment for  payment  must  be  made  to  his  personal  representative,  if  such  there 
be,  and  if  with  the  exercise  of  reasonable  diligence  he  can  be  found. 

§  137.  Presentment  to  persons  liable  as  partners.  —  Where  the  persons  primarily 
liable  on  the  instrument  are  liable  as  partners,  and  no  place  of  payment  is  specified, 
presentment  for  payment  may  be  made  to  any  one  of  them,  even  though  there  has 
been  a  dissolution  of  the  firm. 

§  138.  Presentment  to  joint  debtors.  —  Where  there  are  several  persons  not 
partners,  primarily  liable  on  the  instrument,  and  no  place  of  payment  is  specified, 
presentment  must  be  made  to  them  all. 

§  139.  When  presentment  not  required  to  charge  the  drawer.  —  Presentment  for 
payment  is  not  required  in  order  to  charge  the  drawer  where  he  has  no  right  to  expect 
or  require  that  the  drawee  or  acceptor  will  pay  the  instrument. 

§  140.  When  presentment  not  required  to  charge  the  indorser.  —  Presentment 
for  payment  is  not  required  in  order  to  charge  an  indorser  where  the  instrument 
was  made  or  accepted  for  his  accommodation,  and  he  has  no  reason  to  expect  that 
the  instrument  will  be  paid  if  presented. 

§  141.  When  delay  in  making  presentment  is  excused.  —  Delay  in  making  pre- 
sentment for  payment  is  excused  when  the  delay  is  caused  by  circumstances  beyond 
the  control  of  the  holder  and  not  imputable  to  his  default,  misconduct  or  negligence. 
When  the  cause  of  delay  ceases  to  operate,  presentment  must  be  made  with  reason- 
able diligence. 

§  142.  When  presentment  may  be  dispensed  with.  —  Presentment  for  payment 
!s  dispensed  with  : 

1.  Where  after  the  exercise  of  reasonable  diligence  presentment  as  required 
by  this  act  cannot  be  made ; 

2.  Where  the  drawee  is  a  fictitious  person ; 

3.  By  waiver  of  presentment  express  or  implied. 

§  143.  When  instrument  dishonored  by  non-payment.  —  The  instrument  is  dis- 
honored by  non-payment  when : 

1.  It  is  duly  presented  for  payment  and  payment  is  refused  or  cannot  be 
obtained;  or 

2.  Presentment  is  excused  and  the  instrument  is  overdue  and  unpaid. 

§  144.  Liability  of  person  secondarily  liable,  when  instrument  dishonored.  — 
Subject  to  the  provisions  of  this  act,  when  the  instrument  is  dishonored  by  non- 
payment, an  immediate  right  of  recourse  to  all  parties  secondarily  liable  thereon, 
accrues  to  the  holder. 

§  145.  Time  of  maturity.  —  Every  negotiable  instrument  is  payable  at  the  time 
fixed  therein  without  grace.  When  the  day  of  maturity  falls  upon  Sunday  or  a 
holiday,  the  instrument  is  payable  on  the  next  succeeding  business  day.  Instru- 
ments falling  due  or  becoming  payable  *  on  Saturday  are  to  be  presented  for  payment 
on  the  next  succeeding  business  day,  except  that  instruments  payable  on  demand 
may,  at  the  option  of  the  holder,  be  presented  for  payment  before  twelve  o'clock 
noon  on  Saturday  when  that  entire  day  is  not  a  holiday. 

§  146.  Time;  how  computed.  —  Where  the  instrument  is  payable  at  a  fixed 
period  after  date,  after  sight,  or  after  the  happening  of  a  specified  event,  the  time 

*  The  words  "  or  becoming  payable  "  are  peculiar  to  New  York. 


NEGOTIABLE   INSTRUMENTS  1O-27 

of  payment  is  determined  by  excluding  the  day  from  which  the  time  is  to  begin  to 
run,  and  by  including  the  date  of  payment. 

§  147.  Rule  where  instrument  payable  at  bank.  —  Where  the  instrument  is 
made  payable  at  a  bank  it  is  equivalent  to  an  order  to  the  bank  to  pay  the  same 
for  the  account  of  the  principal  debtor  thereon. 

§  148.  What  constitutes  payment  in  due  course.  —  Payment  is  made  in  due 
course  when  it  is  made  at  or  after  the  maturity  of  the  instrument  to  the  holder 
thereof  in  good  faith  and  without  notice  that  his  title  is  defective. 

ARTICLE   IX 

NOTICE    OP  DISHONOR 

§  160.  To  whom  notice  of  dishonor  must  be  given.  —  Except  as  herein  otherwise 
provided,  when  a  negotiable  instrument  has  been  dishonored  by  non-acceptance 
or  non-payment,  notice  of  dishonor  must  be  given  to  the  drawer  and  to  each 
indorser,  and  any  drawer  or  indorser  to  whom  such  notice  is  not  given  is  dis- 
charged. 

§  161.  By  whom  given.  —  The  notice  may  be  given  by  or  on  behalf  of  the 
holder,  or  by  or  on  behalf  of  any  party  to  the  instrument  who  might  be  compelled 
to  pay  it  to  the  holder,  and  who,  upon  taking  it  up,  would  have  a  right  to  reim- 
bursement from  the  party  to  whom  the  notice  is  given. 

§  162.  Notice  given  by  agent.  —  Notice  of  dishonor  may  be  given  by  an  agent 
either  in  his  own  name  or  in  the  name  of  any  party  entitled  to  give  notice,  whether 
that  party  be  his  principal  or  not. 

§  163.  Effect  of  notice  given  on  behalf  of  holder.  —  Where  notice  is  given  by  or 
on  behalf  of  the  holder,  it  inures  for  the  benefit  of  all  subsequent  holders  and 
all  prior  parties  who  have  a  right  of  recourse  against  the  party  to  whom  it  is 
given. 

§  164.  Effect  where  notice  is  given  by  party  entitled  thereto.  —  Where  notice  is 
given  by  or  on  behalf  of  a  party  entitled  to  give  notice,  it  inures  for  the  benefit  of  the 
holder  and  all  parties  subsequent  to  the  party  to  whom  notice  is  given. 

§  165.  When  agent  may  give  notice.  —  Where  the  instrument  has  been  dis- 
honored in  the  hands  of  an  agent,  he  may  either  himself  give  notice  to  the  parties 
liable  thereon,  or  he  may  give  notice  to  his  principal.  If  he  give  notice  to  his 
principal,  he  must  do  so  within  the  same  time  as  if  he  were  the  holder,  and  the  prin- 
cipal, upon  the  receipt  of  such  notice,  has  himself  the  same  time  for  giving  notice 
as  if  the  agent  had  been  an  independent  holder. 

§  166.  When  notice  sufficient.  —  A  written  notice  need  not  be  signed,  and  an 
insufficient  written  notice  may  be  supplemented  and  validated  by  verbal  com- 
munication. A  misdescription  of  the  instrument  does  not  vitiate  the  notice  unless 
the  party  to  whom  the  notice  is  given  is  in  fact  misled  thereby. 

§  167.  Form  of  notice.  —  The  notice  may  be  in  writing  or  merely  oral,  and  may 
be  given  in  any  terms  which  sufficiently  identify  the  instrument,  and  indicate  that 
it  has  been  dishonored  by  non-acceptance  or  non-payment.  It  may  in  all  cases 
be  given  by  delivering  it  personally  or  through  the  mails. 

§  168.  To  whom  notice  may  be  given.  —  Notice  of  dishonor  may  be  given  either 
to  the  party  himself  or  to  his  agent  in  that  behalf. 

§  169.  Notice  where  party  is  dead.  —  When  any  party  is  dead,  and  his  death 
is  known  to  the  party  giving  notice,  the  notice  must  be  given  to  a  personal  repre- 
sentative, if  there  be  one,  and  if  with  reasonable  diligence  he  can  be  found.  If 


1O-28  NEGOTIABLE   INSTRUMENTS 

there  be  no  personal  representative,  notice  may  be  sent  to  the  last  residence  or  last 
place  of  business  of  the  deceased. 

§  170.  Notice  to  partners.  —  Where  the  parties  to  be  notified  are  partners, 
notice  to  any  one  partner  is  notice  to  the  firm,  even  though  there  has  been  a  dis- 
solution. 

§  171.  Notice  to  persons  jointly  liable.  —  Notice  to  joint  parties  who  are  not 
partners  must  be  given  to  each  of  them,  unless  one  of  them  has  authority  to  receive 
such  notice  for  the  others. 

§  172.  Notice  to  bankrupt.  —  Where  a  party  has  been  adjudged  a  bankrupt  or 
an  insolvent,  or  has  made  an  assignment  for  the  benefit  of  creditors,  notice  may 
be  given  either  to  the  party  himself  or  to  his  trustee  or  assignee. 

§  173.  Time  within  which  notice  must  be  given.  —  Notice  may  be  given  as  soon 
as  the  instrument  is  dishonored;  and  unless  delay  is  excused  as  hereinafter  pro- 
vided, must  be  given  within  the  times  fixed  by  this  chapter. 

§  174.  Where  parties  reside  in  same  place.  —  Where  the  person  giving  and  the 
person  to  receive  notice  reside  in  the  same  place,  notice  must  be  given  within  the 
following  times : 

1.  If  given  at  the  place  of  business  of  the  person  to  receive  notice,  it  must  be 
given  before  the  close  of  business  hours  on  the  day  following  ; 

2.  If  given  at  his  residence,  it  must  be  given  before  the  usual  hours  of  rest  on 
the  day  following ; 

3.  If  sent  by  mail,  it  must  be  deposited  in  the  post-office  in  time  to  reach  him 
in  usual  course  on  the  day  following. 

§  175.  Where  parties  reside  in  different  places.  —  Where  the  person  giving  and 
the  person  to  receive  notice  reside  in  different  places,  the  notice  must  be  given 
within  the  following  times  : 

1.  If  sent  by  mail,  it  must  be  deposited  in  the  post-office  in  time  to  go  by  mail 
the  day  following  the  day  of  dishonor,  or  if  there  be  no  mail  at  a  convenient  hour 
on  that  day,  by  the  next  mail  thereafter. 

2.  If  given  otherwise  than  through  the  post-office,  then  within  the  time  that 
notice  would  have  been  received  in  due  course  of  mail,  if  it  had  been  deposited  in 
the  post-office  within  the  time  specified  in  the  last  subdivision. 

§  176.  When  sender  deemed  to  have  given  due  notice.  —  Where  notice  of  dis- 
honor is  duly  addressed  and  deposited  in  the  post-office,  the  sender  is  deemed  to 
have  given  due  notice,  notwithstanding  any  miscarriage  in  the  mails. 

§  177.  Deposit  in  post-office;  what  constitutes.  —  Notice  is  deemed  to  have 
been  deposited  in  the  post-office  when  deposited  in  any  branch  post-office  or  in  any 
letter  box  under  the  control  of  the  post-office  department. 

§  178.  Notice  to  subsequent  party;  time  of.  —  Where  a  party  receives  notice  of 
dishonor,  he  has,  after  the  receipt  of  such  notice,  the  same  time  for  giving  notice 
to  antecedent  parties  that  the  holder  has  after  the  dishonor. 

§  179.  Where  notice  must  be  sent.  —  Where  a  party  has  added  an  address  to 
his  signature,  notice  of  dishonor  must  be  sent  to  that  address ;  but  if  he  has  not 
given  such  address,  then  the  notice  must  be  sent  as  follows  : 

1.  Either  to  the  post-office  nearest  to  his  place  of  residence,  or  to  the  post- 
office  where  he  is  accustomed  to  receive  his  letters ;   or 

2.  If  he  lives  in  one  place  and  has  his  place  of  business  in  another,  notice  may 
be  sent  to  either  place ;   or 

3.  If  he  is  sojourning  in  another  place,  notice  may  be  sent  to  the  place  where 
he  is  so  sojourning. 


NEGOTIABLE   INSTRUMENTS  1O-29 

But  where  the  notice  is  actually  received  by  the  party  within  the  time  specified 
in  this  act,  it  will  be  sufficient,  though  not  sent  in  accordance  with  the  requirements 
of  this  section. 

§  180.  Waiver  of  Notice.  —  Notice  of  dishonor  may  be  waived,  either  before 
the  time  of  giving  notice  has  arrived  or  after  the  omission  to  give  due  notice,  and 
the  waiver  may  be  express  or  implied. 

§  181.  Whom  affected  by  waiver.  —  Where  the  waiver  is  embodied  in  the  in- 
strument itself,  it  is  binding  upon  all  parties;  but  where  it  is  written  above  the 
signature  of  an  indorser,  it  binds  him  only. 

§  182.  Waiver  of  protest.  —  A  waiver  of  protest,  whether  in  the  case  of  a  foreign 
bill  of  exchange  or  other  negotiable  instrument,  is  deemed  to  be  a  waiver  not  only 
of  a  formal  protest,  but  also  of  presentment  and  notice  of  dishonor. 

§  183.  When  notice  is  dispensed  with.  —  Notice  of  dishonor  is  dispensed  with 
when,  after  the  exercise  of  reasonable  diligence,  it  cannot  be  given  to  or  does  not 
reach  the  parties  sought  to  be  charged. 

§  184.  Delay  in  giving  notice ;  how  excused.  —  Delay  in  giving  notice  of  dis- 
honor is  excused  when  the  delay  is  caused  by  circumstances  beyond  the  control  of 
the  holder  and  not  imputable  to  his  default,  misconduct  or  negligence.  When  the 
cause  of  delay  ceases  to  operate,  notice  must  be  given  with  reasonable  diligence. 

§  185.  When  notice  need  not  be  given  to  drawer.  —  Notice  of  dishonor  is  not 
required  to  be  given  to  the  drawer  in  either  of  the  following  cases : 

1.  Where  the  drawer  and  drawee  are  the  same  person ; 

2.  Where  the  drawee  is  a  fictitious  person  or  a  person  not  having  capacity  to 
contract ; 

3.  Where  the  drawer  is  the  person  to  whom  the  instrument  is  presented  for 
payment ; 

4.  Where  the  drawer  has  no  right  to  expect  or  require  that  the  drawee  or  ac- 
ceptor will  honor  the  instrument ; 

5.  Where  the  drawer  has  countermanded  payment. 

§  186.  When  notice  need  not  be  given  to  indorser.  —  Notice  of  dishonor  is  not 
required  to  be  given  to  an  indorser  in  either  of  the  following  cases : 

1.  Where  the  drawee  is  a  fictitious  person  or  a  person  not  having  capacity  to 
contract,  and  the  indorser  was  aware  of  the  fact  at  the  time  he  indorsed  the  in- 
strument ; 

2.  Where  the  indorser  is  the  person  to  whom  the  instrument  is  presented  for 
payment ; 

3.  Where  the  instrument  was  made  or  accepted  for  his  accommodation. 

§  187.  Notice  of  non-payment  where  acceptance  refused.  —  Where  due  notice  of 
dishonor  by  non-acceptance  has  been  given,  notice  of  a  subsequent  dishonor  by 
non-payment  is  not  necessary,  unless  in  the  meantime  the  instrument  has  been 
accepted. 

§  188.  Effect  of  omission  to  give  notice  of  non-acceptance.  —  An  omission  to 
give  notice  of  dishonor  by  non-acceptance  does  not  prejudice  the  rights  of  a  holder 
in  due  course  subsequent  to  the  omission. 

§  189.  When  protest  need  not  be  made;  when  must  be  made.  —  Where  any  nego- 
tiable instrument  has  been  dishonored  it  may  be  protested  for  non-acceptance  or 
non-payment,  as  the  case  may  be ;  but  protest  is  not  required,  except  in  the  case 
of  foreign  bills  of  exchange. 


1O-30  NEGOTIABLE   INSTRUMENTS 

ARTICLE   X 

DISCHARGE 

§  200.   Instrument ;  how  discharged.  —  A  negotiable  instrument  is  discharged  : 

1.  By  payment  in  due  course  by  or  on  behalf  of  the  principal  debtor ; 

2.  By  payment  in  due  course  by  the  party  accommodated,  where  the  instru- 
ment is  made  or  accepted  for  accommodation ; 

3.  By  the  intentional  cancellation  thereof  by  the  holder ; 

4.  By  any  other  act  which  will  discharge  a  simple  contract  for  the  payment  of 
money ; 

5]  When  the  principal  debtor  becomes  the  holder  of  the  instrument  at  or  after 
maturity  in  his  own  right. 

4 

Payment  is  not  necessarily  in  money ;  it  may  be  made  in  any  form  to 
which  the  parties  agree  as  payment.  Where  the  payment  is  made  in  any 
other  form  than  money,  it  is  a  question  of  intent  and  agreement  whether 
the  obligation  is  canceled  in  giving  a  new  security.  Sometimes  collateral 
security  is  given  in  addition.  The  question  sometimes  occurs  whether  a 
transaction  involving  a  negotiable  instrument  is  payment,  or  a  sale  of  the 
instrument. 

"  Tender  "  is  defined  as  an  offer  or  attempt  to  perform  an  act  which 
the  party  offering  is  bound  to  perform.  In  connection  with  negotiable  in- 
struments, if  such  an  offer  is  accepted,  it  becomes  payment,  rather  than 
tender  which  implies  non-acceptance.  It  is  well  accepted  that  tender  of 
money  shall  be  in  lawful  money,  or  "  legal  tender  "  and  nothing  else.  Bank 
notes,  and  even  some  of  the  paper  money  issued  by  the  United  States  are 
not  legal  tender,  as  has  been  stated.  If  these  are  received,  however,  they 
are  sustained  as  a  proper  medium  of  payment. 

It  is  not  competent,  ordinarily,  to  discharge  an  instrument  by  a  credit 
on  the  books  unless  this  has  been  in  some  way  authorized,  but  a  note 
made  payable  at  a  bank  implies  authority  in  the  bank  to  pay  from  the 
maker's  account,  although  it  does  not  compel  it. 

Payment  should  be  made  by  the  principal  debtor;  the  acceptor  of  a 
bill,  or  the  maker  of  a  note  is  the  principal  debtor.  If  payment  of  a  bill 
is  made  by  the  drawer,  this  amounts  to  a  purchase,  and  the  drawer  has  his 
remedy  against  the  acceptor.  Payment  by  any  indorser  as  a  guarantor 
likewise  gives  him  his  remedy  against  the  principal  debtor,  as  well  as 
against  previous  indorsers. 

The  holder  of  an  instrument  is  entitled  to  payment  in  full,  but  may 
accept  partial  payments  in  part  satisfaction.  If  the  holder  gives  additional 
time  to  the  principal  debtor,  he  practically  makes  a  new  contract  to  which 
the  indorsers  are  not  parties,  so  that  their  liability  ceases. 

§  201.  When  persons  secondarily  liable  on,  discharged.  —  A  person  secondarily 
liable  on  the  instrument  is  discharged : 


NEGOTIABLE   INSTRUMENTS  1O-31 

1.  By  any  act  which  discharges  the  instrument; 

2.  By  the  intentional  cancellation  of  his  signature  by  the  holder ; 

3.  By  the  discharge  of  a  prior  party ; 

4.  By  a  valid  tender  of  payment  made  by  a  prior  party ; 

5.  By  a  release  of  the  principal  debtor,  unless  the  holder's  right  of  recourse 
against  the  party  secondarily  liable  is  expressly  reserved ; 

6.  By  any  agreement  binding  upon  the  holder  to  extend  the  time  of  payment 
or  to  postpone  the  holder's  right  to  enforce  the  instrument,*  unless  the  right  of  re- 
course against  such  party  is  expressly  reserved. 

§  202.  —  Right  of  party  who  discharges  instrument.  —  Where  the  instrument  is 
paid  by  a  party  secondarily  liable  thereon,  it  is  not  discharged ;  but  the  party  so 
paying  it  is  remitted  to  his  former  rights  as  regards  all  prior  parties,  and  he  may 
strike  out  his  own  and  all  subsequent  indorsements,  and  again  negotiate  the  instru- 
ment, except : 

1.  Where  it  is  payable  to  the  order  of  a  third  person,  and  has  been  paid  by 
the  drawer ;  and 

2.  Where  it  was  made  or  accepted  for  accommodation,  and  has  been  paid  by 
the  party  accommodated. 

§  203.  Renunciation  by  holder.  —  The  holder  may  expressly  renounce  his  rights 
against  any  party  to  the  instrument,  before,  at  or  after  its  maturity.  An  absolute 
and  unconditional  renunciation  of  his  rights  against  the  principal  debtor  made  at 
or  after  the  maturity  of  the  instrument,  discharges  the  instrument.  But  a  renun- 
ciation does  not  affect  the  rights  of  a  holder  in  due  course  without  notice.  A  re- 
nunciation must  be  in  writing,  unless  the  instrument  is  delivered  up  to  the  person 
primarily  liable  thereon. 

§  204.  Cancellation;  unintentional;  burden  of  proof. — A  cancellation  made 
unintentionally,  or  under  a  mistake,  or  without  the  authority  of  the  holder,  is  in- 
operative; but  where  an  instrument  or  any  signature  thereon  appears  to  have 
been  canceled  the  burden  of  proof  lies  on  the  party  who  alleges  that  the  cancella- 
tion was  made  unintentionally,  or  under  a  mistake  or  without  authority. 

§  205.  Alteration  of  instrument;  effect  of.  —  Where  a  negotiable  instrument  is 
materially  altered  without  the  assent  of  all  parties  liable  thereon,  it  is  avoided, 
except  as  against  a  party  who  has  himself  made,  authorized  or  assented  to  the 
alteration  and  subsequent  indorsers.  But  when  an  instrument  has  been  materially 
altered  and  is  in  the  hands  of  a  holder  in  due  course,  not  a  party  to  the  alteration, 
he  may  enforce  payment  thereof  according  to  its  original  tenor. 

§  206.    What  constitutes  a  material  alteration.  —  Any  alteration  which  changes : 

1.  The  date ; 

2.  The  sum  payable,  either  for  principal  or  interest  ; 

3.  The  time  or  place  of  payment ; 

4.  The  number  or  the  relations  of  the  parties ; 

5.  The  medium  or  currency  in  which  payment  is  to  be  made ; 

Or  which  adds  a  place  of  payment  where  no  place  of  payment  is  specified,  or 
any  other  change  or  addition  which  alters  the  effect  of  the  instrument  in  any  re- 
spect, is  a  material  alteration. 

While  a  bank  is  responsible  if  it  pays  money  on  a  forged  signature,  the 
case  of  an  incomplete  instrument  is  on  a  different  basis  if  it  has  been  de- 

*  By  an  error  in  engrossing,  the  words  "unless  made  with  the  assent  of  the  party  secon- 
darily liable,  or  "  after  the  word  "  instrument  "  are  omitted  in  the  New  York  Act. 


1O-32  NEGOTIABLE   INSTRUMENTS 

livered.  If  a  check  is  signed  and  the  amount  not  filled  in,  and  the  amount 
is  filled  in  by  another  improperly,  and  the  check  comes  into  the  hands  of  a 
"  holder  in  due  course/ '  the  latter  can  collect,  even  if  it  is  the  bank.  The 
maker  was  negligent  and  his  rights  yield.  If  delivery  has  never  been 
made  by  the  maker,  however,  the  holder  cannot  recover. 

In  a  similar  way  it  may  be  negligence  to  make  and  issue  any  in- 
strument in  such  form  that  an  alteration  can  readily  be  made,  such  as 
leaving  free  spaces  which  may  be  filled  in  or  signing  a  paper  such  that 
by  cutting  off  a  part,  its  effect  is  changed.  In  the  latter  case  the  oppor- 
tunity for  so  cutting  it  must  be  reasonably  evident  if  negligence  is  to  be 
imputed. 

In  filling  out  a  check  the  maker  should  take  care  that  there  is  no  oppor- 
tunity to  fill  out  spaces  not  covered  by  writing  or  lines,  and  that  the 
amount  shown  in  figures  does  not  permit  alteration  or  "  raising."  Banks 
probably  would  be  held  liable  if  they  should  issue  drafts  readily  altered. 
The  custom  seems  well  established  for  banks  to  use  some  form  of  "  pro- 
tector," which  either  perforates  or  stamps  the  amount  through  or  into  the 
body  of  the  draft,  so  that  erasure  and  change  is  impossible.  A  bank  in 
such  cases  would  probably  be  held  liable  for  failing  to  use  some  protecting 
scheme  while  an  individual  might  not.  Check  books  are  also  made  now 
on  paper  chemically  treated,  or  with  the  face  covered  with  machine  or  scroll 
work,  to  prevent  erasing  either  by  chemicals  or  by  scraping.  Many  busi- 
ness houses  use  some  form  of  protector  and  might  be  held  liable  if  they 
neglected  a  reasonable  precaution  of  this  sort. 

ARTICLE   XIV 

PROTEST 

§  260.  In  what  cases  protest  necessary.  —  Where  a  foreign  bill  appearing  on  its 
face  to  be  such  is  dishonored  by  non-acceptance,  it  must  be  duly  protested  for  non- 
acceptance,  and  where  such  a  bill  which  has  not  previously  been  dishonored  by  non- 
acceptance  is  dishonored  by  non-payment,  it  must  be  duly  protested  for  non-pay- 
ment. If  it  is  not  so  protested,  the  drawer  and  indorsers  are  discharged.  Where 
a  bill  does  not  appear  on  its  face  to  be  a  foreign  bill,  protest  thereof  in  case  of  dis- 
honor is  unnecessary. 

§  261.  Protest;  how  made.  —  The  protest  must  be  annexed  to  the  bill,  or  must 
contain  a  copy  thereof,  and  must  be  under  the  hand  and  seal  of  the  notary  making 
it,  and  must  specify : 

1.  The  time  and  place  of  presentment ; 

2.  The  fact  that  presentment  was  made  and  the  manner  thereof ; 

3.  The  cause  or  reason  for  protesting  the  bill ; 

4.  The  demand  made  and  the  answer  given,  if  any,  or  the  fact  that  the  drawee 
or  acceptor  could  not  be  found. 

§  262.    Protest;  by  whom  made.  —  Protest  may  be  made  by : 
1.  A  notary  public ;  or 


NEGOTIABLE   INSTRUMENTS  1O-33 

2.  By  any  respectable  resident  of  the  place  where  the  bill  is  dishonored,  in  the 
presence  of  two  or  more  creditable  witnesses. 

§  263.  Protest;  when  to  be  made.  —  When  a  bill  is  protested,  such  protest 
must  be  made  on  the  day  of  its  dishonor,  unless  delay  is  excused  as  herein  provided. 
When  a  bill  has  been  duly  noted,  the  protest  may  be  subsequently  extended  as  of 
the  date  of  the  noting. 

§  264.  Protest;  where  made.  —  A  bill  must  be  protested  at  the  place  where 
it  is  dishonored,  except  that  when  a  bill  drawn  payable  at  the  place  of  business  or 
residence  of  some  person  other  than  the  drawee,  has  been  dishonored  by  non- 
acceptance,  it  must  be  protested  for  non-payment  at  the  place  where  it  is  expressed 
to  be  payable,  and  no  further  presentment  for  payment  to,  or  demand  on,  the 
drawee  is  necessary. 

§  265.  Protest  both  for  non-acceptance  and  non-payment.  —  A  bill  which  has 
been  protested  for  non-acceptance  may  be  subsequently  protested  for  non-payment. 

§  266.  Protest  before  maturity  where  acceptor  insolvent.  —  Where  the  acceptor 
has  been  adjudged  a  bankrupt  or  an  insolvent,  or  has  made  an  assignment  for  the 
benefit  of  creditors,  before  the  bill  matures,  the  holder  may  cause  the  bill  to  be 
protested  for  better  security  against  the  drawer  and  indorsers. 

§  267.  When  protest  dispensed  with.  —  Protest  is  dispensed  with  by  any  cir- 
cumstances which  would  dispense  with  notice  of  dishonor.  Delay  in  noting  or 
protesting  is  excused  when  delay  is  caused  by  circumstances  beyond  the  control 
of  the  holder  and  not  imputable  to  his  default,  misconduct,  or  negligence.  When 
the  cause  of  delay  ceases  to  operate,  the  bill  must  be  noted  or  protested  with  reason- 
able diligence. 

§  268.  Protest  where  bill  is  lost  or  destroyed  or  wrongly  detained.  —  Where  a  bill 
is  lost  or  destroyed,  or  is^ wrongly  detained  from  the  person  entitled  to  hold  it,  pro- 
test may  be  made  on  a  copy  or  written  particulars  thereof. 


ARTICLE   XV 

ACCEPTANCE    FOR    HONOR 

§  280.  When  bill  may  be  accepted  for  honor.  —  Where  a  bill  of  exchange  has 
been  protested  for  dishonor  by  non-acceptance  or  protested  for  better  security  and 
is  not  overdue,  any  person  not  being  a  party  already  liable  thereon  may,  with  the 
consent  of  the  holder,  intervene  and  accept  the  bill  supra  protest  for  the  honor  of 
any  party  liable  thereon  or  for  the  honor  of  the  person  for  whose  account  the  bill 
!s  drawn.  The  acceptance  for  honor  may  be  for  part  only  of  the  sum  for  which 
the  bill  is  drawn ;  and  where  there  has  been  an  acceptance  for  honor  for  one  party, 
there  may  be  a  further  acceptance  by  a  different  person  for  the  honor  of  another 
party. 

§  281.  Acceptance  for  honor;  how  made.  —  An  acceptance  for  honor  supra 
protest  must  be  in  writing  and  indicate  that  it  is  an  acceptance  for  honor,  and  must 
be  signed  by  the  acceptor  for  honor. 

§  282.  When  deemed  to  be  an  acceptance  for  honor  of  the  drawer.  —  Where  an 
acceptance  for  honor  does  not  expressly  state  for  whose  honor  it  is  made,  it  is 
deemed  to  be  an  acceptance  for  the  honor  of  the  drawer. 

§  283.  Liability  of  acceptor  for  honor.  —  The  acceptor  for  honor  is  liable  to  the 
holder  and  to  all  parties  to  the  bill  subsequent  to  the  party  for  whose  honor  he  has 
accepted. 


1C— 34  NEGOTIABLE   INSTRUMENTS 

§  284.  Agreement  of  acceptor  for  honor.  —  The  acceptor  for  honor  by  such  ac- 
ceptance engages  that  he  will  on  due  presentment  pay  the  bill  according  to  the 
terms  of  his  acceptance,  provided  it  shall  not  have  been  paid  by  the  drawee,  and 
provided  also  that  it  shall  have  been  duly  presented  for  payment  and  protested  for 
non-payment  and  notice  of  dishonor  given  to  him. 

§  285.  Maturity  of  bill  payable  after  sight ;  accepted  for  honor.  —  Where  a  bill 
payable  after  sight  is  accepted  for  honor,  its  maturity  is  calculated  from  the  date 
of  the  noting  for  non-acceptance  and  not  from  the  date  of  the  acceptance  for  honor. 

§  286.  Protest  of  bill  accepted  for  honor  or  containing  a  reference  in  case  of  need.  — 
Where  a  dishonored  bill  has  been  accepted  for  honor  supra  protest  or  contains  a 
reference  in  case  of  need,  it  must  be  protested  for  non-payment  before  it  is  pre- 
sented for  payment  to  the  acceptor  for  honor  or  referee  in  case  of  need. 

§  287.  Presentment  for  payment  to  acceptor  for  honor ;  how  made.  —  Present- 
ment for  payment  to  the  acceptor  for  honor  must  be  made  as  follows : 

1.  If  it  is  to  be  presented  in  the  place  where  the  protest  for  non-payment  was 
made,  it  must  be  presented  not  later  than  the  day  following  its  maturity ; 

2.  If  it  is  to  be  presented  in  some  other  place  than  the  place  where  it  was 
protested,  then  it  must  be  forwarded  within  the  time  specified  in  section  one  hun- 
dred and  seventy-five. 

§  288.  When  delay  in  making  presentment  is  excused.  —  The  provisions  of  sec- 
tion one  hundred  and  forty-one  apply  where  there  is  delay  in  making  presentment 
to  the  acceptor  for  honor  or  referee  in  case  of  need. 

§  289.  Dishonor  of  bill  by  acceptor  for  honor.  —  When  the  bill  is  dishonored  by 
the  acceptor  for  honor  it  must  be  protested  for  non-payment  by  him. 


ARTICLE   XVI 

PAYMENT   FOR    HONOR 

§  300.  Who  may  make  payment  for  honor.  —  Where  a  bill  has  been  protested 
for  non-payment,  any  person  may  intervene  and  pay  its  supra  protest  for  the  honor 
of  any  person  liable  thereon  or  for  the  honor  of  the  person  for  whose  account  it  was 
drawn. 

§301.  Payment  for  honor ;  how  made.  —  The  payment  for  honor  supra  protest 
in  order  to  operate  as  such  and  not  as  a  mere  voluntary  payment  must  be  attested 
by  a  notarial  act  of  honor,  which  may  be  appended  to  the  protest  or  form  an  exten- 
sion to  it. 

§  302.  Declaration  before  payment  for  honor.  —  The  notarial  act  of  honor  must 
be  founded  on  a  declaration  made  by  the  payer  for  honor,  or  by  his  agent  in  that 
behalf  declaring  his  intention  to  pay  the  bill  for  honor  and  for  whose  honor  he 
pays. 

§  303.  Preference  of  parties  offering  to  pay  for  honor.  —  Where  two  or  more 
persons  offer  to  pay  a  bill  for  the  honor  of  different  parties,  the  person  whose  pay- 
ment will  discharge  most  parties  to  the  bill  is  to  be  given  the  preference. 

§  304.  Effect  on  subsequent  parties  where  bill  is  paid  for  honor.  —  Where  a  bill 
has  been  paid  for  honor  all  parties  subsequent  to  the  party  for  whose  honor  it  is 
paid  are  discharged,  but  the  payer  for  honor  is  subrogated  for,  and  succeeds  to, 
both  the  rights  and  duties  of  the  holder  as  regards  the  party  for  whose  honor  he 
pays  and  all  parties  liable  to  the  latter. 

§  305.    Where  holder  refuses  to  receive  payment  supra  protest.  —  Where  the 


NEGOTIABLE   INSTRUMENTS  1O-35 

holder  of  a  bill  refuses  to  receive  payment  supra  protest,  lie  loses  his  right  of  re- 
course against  any  party  who  would  have  been  discharged  by  such  payment. 

§  306.  Rights  of  payer  for  honor.  —  The  payer  for  honor,  on  paying  to  the 
holder  the  amount  of  the  bill  and  the  notarial  expenses  incidental  to  its  dishonor, 
is  entitled  to  receive  both  the  bill  itself  and  the  protest. 

ARTICLE   XVII 

BILLS    IN   SETS 

§  310.  Bills  in  sets  constitute  one  bill.  —  Where  a  bill  is  drawn  in  a  set,  each 
part  of  the  set  being  numbered  and  containing  a  reference  to  the  other  parts,  the 
whole  of  the  parts  constitute  one  bill. 

§  311.  Rights  of  holders  where  different  parts  are  negotiated.  —  Where  two  or 
more  parts  of  a  set  are  negotiated  to  different  holders  in  due  course,  the  holder 
whose  title  first  accrues  is  as  between  such  holders  the  true  owner  of  the  bill.  But 
nothing  in  this  section  affects  the  rights  of  a  person  who  in  due  course  accepts  or 
pays  the  part  first  presented  to  him. 

§  312.  Liability  of  holder  who  indorses  two  or  more  parts  of  a  set  to  different 
persons.  —  Where  the  holder  of  a  set  indorses  two  or  more  parts  to  different  persons 
he  is  liable  on  every  such  part,  and  every  indorser  subsequent  to  him  is  liable  on  the 
part  he  has  himself  indorsed,  as  if  such  parts  were  separate  bills. 

§  313.  Acceptance  of  bills  drawn  in  sets.  —  The  acceptance  may  be  written  on 
any  part,  and  it  must  be  written  on  one  part  only.  If  the  drawee  accepts  more 
than  one  part,  and  such  accepted  parts  are  negotiated  to  different  holders  in  due 
course,  he  is  liable  on  every  such  part  as  if  it  were  a  separate  bill. 

§  314.  Payment  by  acceptor  of  bills  drawn  in  sets.  —  When  the  acceptor  of  a 
bill  drawn  in  a  set  pays  it  without  requiring  the  part  bearing  his  acceptance  to  be 
delivered  up  to  him,  and  that  part  at  maturity  is  outstanding  in  the  hands  of  a 
holder  in  due  course,  he  is  liable  to  the  holder  thereon. 

§  315.  Effect  of  discharging  one  of  a  set.  —  Except  as  herein  otherwise  pro- 
vided, where  any  one  part  of  a  bill  drawn  in  a  set  is  discharged  by  payment  or 
otherwise  the  whole  bill  is  discharged. 

ARTICLE  XIX 

NOTES   GIVEN  FOR  PATENT  RIGHTS   AND   FOR  A  SPECULATIVE    CONSIDERATION 
[This  article  appears  only  in  the  New  York  Act.] 

§  330.  Negotiable  instruments  given  for  patent  rights.  —  A  promissory  note  or 
other  negotiable  instrument,  the  consideration  of  which  consists  wholly  or  partly 
of  the  right  to  make,  use  or  sell  any  invention  claimed  or  represented  by  the  vendor 
at  the  time  of  sale  to  be  patented,  must  contain  the  words  "given  for  a  patent 
right"  prominently  and  legibly  written  or  printed  on  the  face  of  such  note  or  in- 
strument above  the  signature  thereto ;  and  such  note  or  instrument  in  the  hands 
of  any  purchaser  or  holder  is  subject  to  the  same  defenses  as  in  the  hands  of  the  orig- 
inal holder ;  but  this  section  does  not  apply  to  a  negotiable  instrument  given  solely 
for  the  purchase  price  or  the  use  of  a  patented  article. 

§  331.  Negotiable  instruments  for  a  speculative  consideration.  —  If  the  considera- 
tion of  a  promissory  note  or  other  negotiable  instrument  consists  in  whole  or  in 
part  of  the  purchase  price  of  any  farm  product,  at  a  price  greater  by  at  least  four 


1O-36  NEGOTIABLE   INSTRUMENTS 

times  than  the  fair  market  value  of  the  same  product  at  the  time,  in  the  locality, 
or  of  the  membership  and  rights  in  an  association,  company  or  combination  to 
produce  or  sell  any  farm  product  at  a  fictitious  rate,  or  of  a  contract  or  bond  to 
purchase  or  sell  any  farm  product  at  a  price  greater  by  four  times  than  the  market 
value  of  the  same  product  at  the  time  in  the  locality,  the  words,  "given  for  a  specu- 
lative consideration,"  or  other  words  clearly  showing  the  nature  of  the  considera- 
tion, must  be  prominently  and  legibly  written  or  printed  on  the  face  of  such  note 
or  instrument  above  the  signature  thereof;  and  such  note  or  instrument,  in  the 
hands  of  any  purchaser  or  holder,  is  subject  to  the  same  defenses  as  in  the  hands 
of  the  original  owner  or  holder. 

§  332.  How  negotiable  bonds  are  made  non-negotiable.  —  The  owner  or  holder 
of  any  corporate  or  municipal  bond  or  obligation  (except  such  as  are  designated  to 
circulate  as  money,  payable  to  bearer),  heretofore  or  hereafter  issued  in  and  pay- 
able in  this  State,  but  not  registered  in  pursuance  of  any  State  law,  may  make  such 
bond  or  obligation,  or  the  interest  coupon  accompanying  the  same,  non-negotiable, 
by  subscribing  his  name  to  a  statement  indorsed  thereon  that  such  bond,  obliga- 
tion or  coupon  is  his  property ;  and  thereon  the  principal  sum  therein  mentioned 
is  payable  only  to  such  owner  or  holder,  or  his  legal  representatives  or  assigns,  un- 
less such  bond,  obligation  or  coupon  be  transferred  by  indorsement  in  blank,  or 
payable  to  bearer,  or  to  order,  with  the  addition  of  the  assignor's  place  of  residence. 

ARTICLE   XX 
LAWS  REPEALED;  WHEN  TO  TAKE  EFFECT 

§  340.  Laws  repealed.  —  Of  the  laws  enumerated  in  the  schedule  hereto 
annexed,  that  portion  specified  in  the  last  column  is  hereby  repealed. 

§  341.    When  to  take  effect.  —  This  chapter  shall  take  effect  immediately. 

An  additional  act  is  shown  below  which  is  outside  the  "  Negotiable 
Instruments  Law,"  and  other  States  may  have  similar  acts,  so  that  the 
statutes  of  each  State  should  be  examined  in  case  the  engineer  has  interest 
in  the  matter. 

LAWS   OF  NEW  YORK 

AN  ACT  to  amend  the  Penal  Code,  relative  to  violation  of  The  Negotiable  Instru- 
ments Law. 

Section  1.  The  penal  code  is  hereby  amended  by  inserting  at  the  end  of  title 
twelve  the  following  new  sections : 

§  384m.  Notes  given  for  patent  rights.  —  A  person  who  takes,  sells  or  transfers 
a  promissory  note  or  other  negotiable  instrument,  knowing  the  consideration  of 
such  note  or  instrument  to  consist  in  whole  or  in  part  of  the  right  to  make,  use  or 
sell  any  patent  invention  or  inventions,  or  any  invention  claimed  or  represented  to 
be  patented,  without  having  the  words  "given  for  a  patent  right"  written  or  printed 
legibly  and  prominently  on  the  face  of  such  note  or  instrument  above  the  signature 
thereto,  is  guilty  of  a  misdemeanor. 

§  384n.  Notes  given  for  a  speculative  consideration.  —  A  person  who  takes, 
sells  or  transfers  a  promissory  note  or  other  negotiable  instrument,  knowing  the 
consideration  of  such  note  or  instrument  to  consist  in  whole  or  in  part  of  the  pur- 


NEGOTIABLE   INSTRUMENTS  1O-37 

chase  price  of  any  farm  product  at  a  price  greater  by  four  or  more  times  than  the 
fair  market  value  of  the  same  product  at  the  time  in  the  locality,  or  in  which  the 
consideration  shall  be  in  whole  or  in  part  membership  of  and  rights  in  an  associa- 
tion, company  or  combination  to  produce  or  sell  any  farm  product  at  a  fictitious 
rate,  or  of  a  contract  or  bond  to  purchase  or  sell  any  farm  product  at  such  rate, 
without  having  the  words  "given  for  a  speculative  consideration,"  or  other  words 
clearly  showing  the  nature  of  the  consideration  prominently  and  legibly  written  or 
printed  on  the  face  of  such  note  or  instrument  above  the  signature  thereof  is  guilty 
of  a  misdemeanor. 

§  2.  Section  two  of  chapter  sixty-five  of  the  laws  of  eighteen  hundred  and 
seventy-seven,  and  section  two  of  chapter  two  hundred  and  sixty-two  of  the  laws 
of  eighteen  hundred  and  ninety-one,  are  hereby  repealed. 

§  3.  This  act  shall  take  effect  the  first  day  of  October,  eighteen  hundred  and 
ninety-seven. 


CHAPTER  XI 
RAILROADS 

Interest  of  Engineers.  Civil  engineers  or  mechanical  engineers  are 
nowadays  so  often  selected  for  the  management  and  operation  of  railroads 
that  a  special  chapter  on  railroads  seems  appropriate ;  electrical  engineers 
in  the  near  future  may  be  expected  to  have  a  similar  and  equal  interest. 
The  engineer's  interest  is  not  restricted  to  location  and  construction,  but 
extends  to  operation  and  to  management. 

Route.  The  first  duty  in  connection  with  a  railroad  project  is  the 
selection  of  the  general  route,  in  pursuance  of  the  wishes  of  the  projectors 
in  the  case  of  a  new  railroad,  or  of  the  proper  officials  in  the  case  of  exten- 
sion of  an  existing  railroad.  In  either  case  this  is  commonly  a  preliminary 
either  to  securing  or  to  formally  extending  a  charter.  The  general  route 
stated  should  be  sufficiently  explicit  to  meet  the  requirements  of  law  but 
not  so  closely  defined  as  to  limit  such  freedom  of  action  and  selection  as  is 
allowable  under  the  law.  In  a  venture  of  this  magnitude,  the  services  of  a 
lawyer  should  be  available  and  preferably  in  consultation  with  the  engineer. 
In  some  cases  exact  location  may  be  required  previous  to  incorporation,  in 
others  not. 

Incorporation.  The  details  of  incorporation  differ  from  those  neces- 
sary for  business  corporations,  but  those  are  the  lawyer's,  and  not  the 
engineer's  duty.  So  far  as  the  route  is  concerned,  the  approval  of  the 
engineer  is  properly  necessary.  The  raising  of  funds  belongs  to  the  incor- 
porators ;  nevertheless  the  engineer  should  read  and  come  to  understand 
the  laws  of  the  State  dealing  with  the  incorporation  of  railroads.  It  is 
worth  his  while  to  have  a  broad  outlook  over  the  entire  railroad  field. 

Financing.  In  financing  railroads,  in  earlier  days  all  the  money  re- 
quired was  in  some  cases  raised  by  stock  subscription.  Nearly  all  of  the 
railroads  now  are  financed  in  part  from  the  sale  of  bonds.  Stocks  and 
bonds  of  railroad  companies  are  of  great  variety.  Among  the  classes  of 
stock  there  are  common  and  preferred;  the  latter  may  be  1st  preferred 
or  2d  preferred,  cumulative  or  non-cumulative. 

Bonds.  Bonds  are  more  commonly  mortgage  bonds,  but  often  are 
not.  One  railroad  has  1st,  2d,  3d,  4th,  and  5th  mortgage  bonds.  There 

11-1 


11-2  RAILROADS 

are  also  income  bonds  which  in  some  cases  are  little  better  than  preferred 
stock.  Some  bonds  are  "  convertible  "  into  preferred  stock,  some  into 
common  stock.  Equipment  bonds  are  not  uncommon.  There  are  also 
occasionally  prior  lien  bonds,  and  other  bonds  with  various  names  and 
characteristics.  Following  the  customs  of  their  country,  English  owners 
often  show  a  preference  for  "  debentures  "  or  debenture  bonds,  the  terms 
of  which  are  such  that  foreclosure  is  not  possible  for  non-payment  of 
interest  when  due. 

Most  of  the  special  forms  of  bond  and  much  of  the  preferred  stock  are 
the  result  of  re-financing  or  re-organizing,  in  many  cases  after  railroads 
have  been  placed  in  the  hands  of  a  receiver.  With  railroads  whose  credit 
is  satisfactory,  the  common  stock  and  mortgage  bonds  usually  furnish  suffi- 
cient variety  to  satisfy  investors. 

The  railroads  of  the  United  States  as  a  whole  show  a  moderate  excess 
of  bonds  over  stock.  Individual  railroads  show  great  differences  in  the 
proportion  between  the  two,  even  among  the  important  systems. 

At  the  close  of  the  year  1915,  38,861  miles  of  railroad  with  stock  and 
funded  debt  amounting  to  $2,372,204,457,  were  in  the  hands  of  receivers, 
more  commonly  from  inability  to  pay  interest  on  their  bonds  but  some- 
times imore  directly  from  inability  to  meet  other  obligations.  Receiver's 
certificates  are  another  form  of  security  issued  to  acquire  funds  necessary 
to  tide  over  an  emergency  during  the  receivership.  They  are  issued  to 
protect  the  interests  of  the  creditors,  under  the  orders  of  the  Court,  and 
thus  properly  have  priority  over  the  bonds  and  all  other  forms  of  in- 
debtedness. 

Location.  The  definite  location  of  the  line  of  railroad  is  the  next  step 
in  order.  This  must  be  followed,  or  accompanied,  by  the  filing  of  plans, 
and  perhaps  profiles,  of  the  located  lines ;  these  filings  must  comply  with 
the  laws  of  the  State  involved,  and  with  United  States  laws  in  case  the 
public  domain  is  entered  or  crossed.  The  maps  filed  must  be  adequate  to 
the  purpose.  The  requirements  involve  the  kind  of  maps  and  perhaps 
the  scales,  and  also  the  forms  of  certificates  to  accompany  them.  Here 
again  the  lawyer  is  necessary,  unless  the  engineer  has  had  previous  experi- 
ence in  exactly  the  same  thing.  Unless  State  laws  or  the  charter  confer 
the  right  to  enter  private  lands  for  surveying  purposes,  or  until  by  right 
of  eminent  domain  a  right  is  obtained,  entry  upon  lands  may  be  a  trespass. 
The  charter  very  frequently  does  authorize  such  entry  subject  ordinarily 
to  the  payment  of  damage  actually  caused,  if  any. 

Approval  Necessary.  It  should  be  understood  that  a  location  by  an 
engineer,  not  reported  to  the  company  nor  accepted  by  it,  does  not  secure 
title  to  the  company.  Acceptance  or  approval  by  some  adequate  official 
authority  is  necessary.  Priority  over  another  company  is  not  secured  until 


RAILROADS  11-3 

the  location  is  thus  formally  adopted,  and  in  some  cases  not  until  the  proper 
filings  are  made.  In  some  cases  where  filing  is  not  a  prior  requirement, 
priority  in  instituting  condemnation  proceedings  under  the  right  of  eminent 
domain  will  serve  to  secure  title  against  another  railroad.  Sometimes 
failure  to  build  within  a  limited  time  means  abandonment  of  location  and 
forfeiture  of  a  right  previously  acquired ;  statutory  provisions  may  often 
cover  this. 

Discretion  as  to  Route.  Railroad  authorities  have  reasonable  discre- 
tion in  selecting  the  route.  The  railroad's  rights  in  this  matter  must  be 
reasonably  exercised,  but  there  is  no  necessity  for  proving  the  route  the 
best  or  the  only  feasible  one. 

It  is  often  possible  to  make  minor  changes  in  location ;  in  some  cases 
rights  may  have  been  acquired  by  landowners  or  perhaps  by  another  rail- 
road, and  the  change  may  involve  expense  or  other  difficulty  for  such 
reasons. 

In  some  States  no  new  line  can  be  constructed  until  "  a  certificate  of 
exigency  "  is  issued  by  the  Railroad  Commission.  The  object  is  to  pre- 
vent the  building  of  unnecessary  lines  which  the  public  must  eventually 
support. 

Lands  of  Other  Railroads.  Unless  the  charter  or  some  statute  authorize 
it,  a  newer  railroad  has  not  the  right  to  occupy  and  use  lands  previously 
appropriated  to  another  railroad,  but  the  State  has  the  right  to  specifically 
grant  such  authority.  The  right  to  cross  another  railroad  may  often  be 
implied.  Crossing  at  grade  is  in  disfavor,  and  in  very  many  cases  will 
not  be  allowed  if  any  other  feasible  method  is  apparent. 

Highway  Crossings.  Unless  some  statute  prevents  it,  crossing  a  high- 
way at  grade  is  allowable,  but  many  States  have  passed  laws  not  only  for- 
bidding or  restricting  this,  but  even  providing  for  separating  the  grades  of 
railroads  and  highways  at  existing  crossings,  and  providing  for  the  distri- 
bution of  the  expense  of  the  change.  In  Massachusetts  the  railroad  pays 
65  per  cent,  the  State  25  per  cent,  and  the  city  or  town  10  per  cent  of  such 
cost.  There  is  no  uniformity  in  the  provisions  of  those  States  which  have 
made  any  similar  provisions. 

In  some  cases  crossings  must  be  maintained  for  the  benefit  of  private 
owners  of  farms  which  have  been  cut  in  two,  and  a  lawyer  should  be  con- 
sulted as  to  the  rights  of  such  owners. 

Operation  at  Crossing.  In  the  operation  of  railroads  at  crossings  of 
other  railroads,  or  of  highways  at  grade,  the  precautions  necessary  either 
at  Common  Law,  or  required  by  Statute  Law,  should  be  well  understood. 
For  regulating  crossings  with  railroads,  there  is  often  a  statute  requiring  a 
full  stop  before  crossing  or  else  the  installation  of  an  adequate  interlock- 
ing plant. 


11-4  RAILROADS 

Right  of  Way.  Next  comes  the  securing  of  lands  for  right  of  way, 
station  grounds,  or  other  railroad  purposes.  While  this  is  not  engineering, 
nevertheless  the  engineer  is  often  found  to  be  the  man  most  available  to 
attend  to  such  matters.  If  he  engages  in  this  work,  he  will  probably  be 
expected  to  fill  out  the  blanks  in  deeds  for  real  estate,  to  see  that  the  deeds 
are  properly  signed  and  acknowledged,  and  either  filed  or  delivered  to 
headquarters  for  filing;  he  may  or  may  not  be  called  upon  to  look  up 
titles.  Where  State,  county,  city,  or  town  lands,  whether  streets  or  other- 
wise, are  to  be  crossed  or  occupied,  proper  legal  steps  must  be  taken  to 
secure  such  occupancy  or  acquirement  as  may  be  necessary.  Where 
navigable  streams  or  bodies  of  water  are  to  be  crossed,  the  approval  of  the 
United  States  authorities  must  be  secured. 

Engineer's  Qualifications.  The  engineer  should  prepare  himself  by 
consultation  with  a  lawyer  to  do  properly  the  things  indicated  above ;  un- 
less unusually  experienced  he  should  not  attempt  the  duties  without  such 
consultation.  The  engineer  in  settling  for  right  of  way,  if  not  a  natural 
trader,  should  make  a  point  of  acquiring  skill  in  that  line;  with  some 
experience  he  ought  to  become  at  least  the  equal  of  most  of  the  landowners 
with  whom  he  deals.  Square  dealing  on  his  part,  rather  than  sharp  prac- 
tices, will  prove  of  advantage  to  the  railroad.  Lands  will  seldom  be 
bought  at  their  ordinary  value  and  perhaps  ought  not  to  be ;  experience 
indicates  that  lands  for  right  of  way  cost  about  three  times  the  reasonable 
value  of  such  lands  if  bought  under  ordinary  conditions  and  in  whole  pieces. 

Eminent  Domain.  The  engineer  should  understand  that  where  no 
agreement  can  be  reached,  the  required  lands,  and  under  the  laws  of  some 
States,  material  for  construction  also,  may  be  secured  under  the  "  right  of 
eminent  domain."  The  right  of  the  public  to  the  service  of  common 
carriers  is  such  that  the  courts  have  held  a  railroad  to  be  a  "  public  use  " 
in  the  sense  necessary  for  the  exercise  of  this  right. 

After  a  railroad  has  been  located  and  constructed,  it  is  the  usual  rule 
that  the  right  of  eminent  domain  cannot  be  revived  for  the  purpose  of 
taking  lands  to  straighten  the  lines,  to  double-track  the  road,  or  for  other 
improvement,  unless  a  new  grant  of  authority  for  that  purpose  be  dele- 
gated by  the  State. 

Private  Tracks.  Tracks  to  factories  or  mines,  or  what  are  called  in- 
dustry tracks,  are  not  available  to  the  general  public ;  the  general  public 
has  no  rights  in  them.  The  use  is  therefore  a  private  use,  and  the  right  of 
eminent  domain  cannot  be  invoked  to  acquire  any  necessary  lands.  The 
same  may  be  true  of  lumber  lines  which  are  sometimes  rather  extensive. 

Methods  of  Securing  Lands.  In  securing  lands,  especially  for  station 
grounds,  localities  and  individuals  are  often  willing  either  to  contribute 
outright,  to  sell  at  low  prices,  or  to  aid  in  some  way.  Such  action  on  their 


RAILROADS  11-5 

part  must,  in  general,  be  secured  previous  to  the  determination  of  the 
route,  or  of  the  definite  location.  Bonds  or  agreements  as  to  price  are 
often  secured  in  advance  of  filing  the  location.  In  furtherance  of  such 
action,  locating  engineers  sometimes  run  alternate  locations,  and  the  alter- 
nate line  does  not  always  have  merit.  This  savors  somewhat  of  sharp 
practice.  Forms  used  for  bonds  or  agreements  should  have  the  approval 
of  some  lawyer. 

It  is  further  true  that  under  some  circumstances  an  agreement  to 
locate  on  a  stated  line  or  to  locate  a  station  in  a  special  place  has  been  found 
to  be  illegal  as  against  public  policy ;  this  illegality,  however,  is  not  easy  to 
establish.  A  company  may  legally  re-locate  stations  for  good  reasons  if 
it  properly  consults  public  convenience  in  doing  so.  The  United  States 
laws  allow  the  right  of  way  and  station  grounds  upon  the  public  domain 
to  be  acquired  simply  by  proper  filing. 

Right  of  Way  Title.  What  title  the  railroad  acquires  in  its  right  of 
way  is  a  matter  of  interest.  When  the  right  of  way  is  acquired  through 
the  exercise  of  the  right  of  eminent  domain,  only  an  easement  for  railroad 
purposes  is  secured,  and  when  a  court  of  equity  enforces  specific  perform- 
ance of  contract,  the  same  rule  will  no  doubt  hold ;  but  where  a  deed  in 
fee  simple  is  taken,  the  railroad  secures,  in  most  States,  a  clear  title  and 
may  reconvey  for  any  use.  In  some  States,  however,  it  is  held  that  the 
railroad  has  no  power  to  acquire  lands  for  other  than  purely  railroad  pur- 
poses, and  in  case  of  abandonment  or  disuse,  the  title  reverts  to  the  pre- 
vious owner. 

The  railroad  may  acquire,  by  grant,  lands  for  purposes  not  directly 
connected  with  railroad  construction  or  operation,  where  the  lands  could 
not  be  taken  by  right  of  eminent  domain. 

Construction.  After  the  lands  have  been  secured,  the  work  of  con- 
struction follows,  and  Part  II  of  this  treatise  deals  with  the  details  of  con- 
tract letting,  while  the  whole  field  of  law  as  outlined  in  Part  I  may  be  in- 
volved in  some  way  or  come  into  play  during  the  performance  of  the 
contract. 

Examples.  In  the  excavation  of  cuts,  damage  may  occur  by  violating 
the  right  to  lateral  support.  Bridges  and  culverts  tend  to  obstruct  the 
flow  of  streams.  A  change  of  channel  may  interfere  in  various  ways  with 
the  flow  of  water  in  the  streams  or  over  the  surface.  An  embankment  or 
an  undrained  excavation  may  cause  stagnant  waters  and  create  a  nuisance. 
Surface  waters  may  be  gathered  and  cast  in  great  volume  on  lower  lands. 
Trespass  upon  lands  or  some  form  of  negligence  during  construction  is  also 
liable  to  occur. 

Fencing  and  Cattle.  The  railroad  right  of  way  is  commonly  fenced, 
and  domestic  animals,  particularly  cattle,  cannot  then  get  into  these 


11-6  RAILROADS 

lands.  The  Common  Law  does  not  require  the  railroad  to  fence  its  lands ; 
the  owner  of  animals  must  fence  so  as  to  confine  them.  Cattle  have  no 
right  to  roam  at  large,  and  in  the  absence  of  laws  requiring  fencing,  the 
courts  have  sometimes  held  the  railroad  not  liable  where  cattle  had  strayed 
upon  the  track  and  had  been  killed.  Touching  damages,  one  can  sym- 
pathize with  the  farmer  who  refused  to  state  the  value  of  his  cow  until 
he  received  an  answer  to  his  question,  "  Be  you  the  assessor  or  the  railroad 
claim  agent  ?  "  In  many  States,  however,  railroads  are  required  by  Statute 
Law  to  fence  their  grounds.  When  the  law  requires  this  of  the  railroad, 
an  accident  due  to  lack  of  fences  renders  the  company  liable  to  either 
passengers  or  employees  injured.  Cattle  guards  used  at  highways  are 
the  equivalent  of  fences  at  such  points.  At  private  crossings,  gates  or  bars 
may  be  necessary.  As  to  the  particular  places  where  fences  are  required, 
a  question  of  law  and  fact  arises,  which  may  require  the  services  of  both 
court  and  jury  to  decide. 

Use  of  Streets.  Authority  to  use  streets  or  highways  for  railroad  tracks 
is  not  within  the  powers  of  a  municipality  unless  specifically  granted  in 
the  municipal  charter.  The  authority  rests  in  the  State,  and  is  often 
exercised  directly  by  the  State,  as  it  should  be ;  the  interest  of  the  larger 
public  is  often  greater  than  that  of  the  citizens  of  a  municipality. 

The  municipality  usually  has  the  right  to  regulate  the  use  of  the  rail- 
road in  many  ways,  for  instance  as  to  speed,  as  to  conforming  to  grades  or 
changes  of  grade  in  the  streets,  and  in  other  ways.  It  must,  however, 
exercise  this  right  in  a  way  not  oppressive  or  unreasonable. 

Whether  the  use  of  streets  or  highways  by  a  commercial  railroad  con- 
stitutes a  new  use,  and  an  additional  burden  for  which  abutters  are  en- 
titled to  compensation  seems  not  to  be  fully  settled.  The  courts  differ  as 
to  conditions  which  make  it  so. 

Use  by  Street  Railways.  With  street  railways  also  the  right  to  occupy 
streets  must  come  by  legislative  sanction  from  the  State.  It  is  customary, 
however,  to  delegate  to  the  municipality  the  right  to  grant  locations  in 
various  streets  and  to  regulate  the  occupation  as  well  as  many  matters  of 
construction,  operation,  and  maintenance,  among  these  to  prescribe  the 
motive  power.  There  is  some  question  whether  the  legislature  may  grant 
a  monopoly  in  the  use  of  streets.  In  some  cases,  the  consent  of  abutters 
or  a  specified  proportion  of  the  abutters  is  necessary  to  justify  a  location. 
A  requirement  has  been  made  in  some  States  that  the  franchise  shall  be 
sold  to  the  most  favorable  bidder. 

The  use  of  the  highways  by  street  railways  is  generally  held  not  to  be 
an  additional  burden;  so  also  with  subways  for  rapid  transit.  On  the 
other  hand,  elevated  railways  have  been  required  to  pay  damages  in  some 
cities,  but  the  elements  of  unsightliness  and  noise  have  been  the  controlling 


RAILROADS  11-7 

factors  and  the  damages  sustained  have  been  shown  in  the  decrease  in 
rentals. 

Interurban  Railroads.  Interurban  railroads  partake  of  the  character 
both  of  commercial  railroads  and  of  street  railways.  They  often  have 
their  own  right  of  way  for  considerable  distances  outside  the  cities  although 
necessarily  using  the  city  streets.  They  frequently  carry  express  or 
freight  as  well  as  passengers.  Are  they  subject  to  the  laws  of  railroads 
or,  to  the  contrary,  of  street  railways?  In  cities  they  ought  to  be  subject 
to  regulations  governing  street  railways.  Away  from  cities  they  are  more 
like  commercial  railroads,  and  should  properly  be  subject  to  substantially 
the  same  sort  of  control.  The  use  of  a  country  road  by  an  interurban 
railroad  probably  constitutes  an  additional  burden  on  the  abutters. 

Highway  Crossings.  The  crossing  of  highways  by  a  railroad  or  an 
interurban  railway  presents  elements  of  danger  in  operation.  Signs,  gates, 
bells,  and  whistles  are  all  used  as  warnings  to  users  of  the  highways,  and 
municipal  or  State  regulations  often  require  a  street  railway  car  to  come  to 
a  full  stop  before  crossings.  Care  is  required  of  all  users  of  a  crossing  at 
grade,  and  in  case  of  accident,  an  attempt  will  be  made  to  find  the  party 
guilty  of  negligence,  and  this  will  be  determined  at  the  trial.  The  viola- 
tion of  a  city  ordinance  by  either  party  may  establish  or  place  the  negli- 
gence. What  is  negligence  may  often  depend  upon  the  surroundings  and 
conditions. 

COMMON  CARRIERS 

Definition.  When  the  railroad  is  constructed  and  operation  begins,  it 
becomes  ordinarily  a  common  carrier  and  subject  to  the  laws  governing 
common  carriers. 

All  persons  or  corporations  who  undertake  for  hire  or  reward  to  trans- 
port from  one  place  to  another  either  passengers  or  goods  for  others  who 
choose  to  employ  them  are  common  carriers. 

Law  of  Common  Carriers.  Every  common  carrier  is  bound  to  convey 
for  every  one  who  offers  to  pay  his  lawful  charges,  either  passengers  or  any 
goods  of  a  description  which  he  is  in  the  habit  of  conveying,  unless  his 
conveyance  is  full  or,  for  other  reasons,  he  be  unable  to  convey  them. 
Most  railroads  convey  not  only  passengers,  but  also  mail,  express,  and 
freight  of  nearly  all  kinds,  some  dangerous  or  perishable  commodities  being 
sometimes  excepted.  Some  railroads,  like  the  Boston,  Revere  Beach  & 
Lynn  Railroad,  carry  passengers  only ;  there  are  probably  others  which  carry 
freight  only,  but  for  any  who  offer ;  in  either  case  they  are  common  carriers. 

Private  Railroads.  There  are  others,  among  them  lumber  roads  of  an 
entirely  private  character,  which  serve  only  their  owners  and  are  not 
common  carriers.  In  these  the  public  have  no  rights,  and  such  railroads 


11-8  RAILROADS 

cannot 'exercise  the  right  of  eminent  domain  as  has  been  previously  stated. 
There  are  also  "  industry  tracks  "  leading  to  warehouses  or  factories, 
commonly  connected  with  public  railroads  under  some  special  contract  as 
to  construction,  maintenance,  and  operation.  The  users  of  these  facilities 
have  substantially  the  same  rights  with  the  railroad,  as  a  common  carrier, 
as  others  who  use  the  ordinary  facilities  of  the  railroad  such  as  the  freight 
house  at  the  station  for  loading  or  unloading. 

Carrier's  Lien.  While  a  common  carrier  may  refuse  to  convey  unless 
the  lawful  charges  are  first  paid,  he  may,  and  very  commonly  does,  carry 
goods  looking  to  the  goods  themselves  for  payment,  holding  a  lien  upon 
them  until  the  charges  are  paid.  If,  however,  in  some  way  the  goods  are 
consigned  without  the  consent  of  the  owner  by  some  wrongdoer  who  has 
no  title  to  the  goods,  the  lien  will  not  hold  against  the  true  owner.  The 
owner  was  not  at  fault;  the  carrier  was  negligent  to  the  extent  that  he 
might  have  demanded  payment  in  advance;  the  owner's  right  is  clearly 
superior  either  at  law  or  in  good  morals.  The  carrier  is  not  restricted  to 
his  lien  (that  is  to  the  goods)  for  payment ;  he  may  retain  the  goods  and 
sue  for  the  charges  as  his  remedy.  Where  prepayment  is  required  the 
shipper  is  entitled  to  a  receipt.  The  carrier  is  entitled,  in  addition  to 
other  charges,  to  demurrage  charges  for  delay  in  unloading,  to  cover  use  of 
cars  and  track.  Whether  the  carrier's  lien  covers  demurrage  charges  seems 
to  be  unsettled. 

Connecting  Lines.  For  the  through  carriage  of  freight  over  connect- 
ing lines,  the  initial  carrier,  by  the  weight  of  authority  in  the  United  States, 
acts  as  the  agent  of  the  other  lines ;  the  final  carrier  acts  as  the  collecting 
agent  for  the  freight  charges,  and  holds  a  lien  upon  the  goods  for  the  full 
charges.  Whether  the  local  agent  has  authority  to  contract  for  carriage 
beyond  his  own  line  seems  not  to  be  completely  established.  Practice 
and  custom  sometimes  serve  to  solve  the  question.  Usually  in  the  absence 
of  an  agreement  the  carrier  is  not  obliged  to  pay  accrued  charges  and 
collect  at  the  end,  but  for  goods  accepted  for  delivery  C.O.D.,  the  carrier 
has  agreed  to  collect  such  charges.  Custom,  well  established,  may  serve 
to  fix  the  legal  status  between  carriers. 

Responsibility  of  Carrier  of  Freight.  The  common  carrier  is  respon- 
sible for  the  safe  and  prompt  conduct  of  goods  put  in  his  hands  as  a  carrier 
of  freight.  In  the  days  of  transportation  by  wagon,  the  teamster  was  the 
only  party  at  hand  in  position  to  resist  highwaymen  attempting  to  steal 
the  goods ;  the  law  therefore  held  him  (or  his  principal)  responsible ;  other- 
wise he  might  be  in  league  with  the  robbers.  The  law  was  a  good  one 
and  there  has  not  been  sufficient  reason  to  change  it. 

Extent  of  Responsibility.  The  common  carrier  is  responsible  for  all 
damage  from  any  cause  whatsoever ;  barring  only  from  the  "  act  of  God," 


RAILROADS  11-9 

(which  means  inevitable  accident)  or  from  the  public  enemy,  or  from  the 
negligence  of  the  shipper.  The  act  of  God  is  a  force,  superior  to  all  human 
agency,  whose  occurrence  could  not  have  been  forestalled  by  any  reason- 
able human  foresight  and  action.  A  cloudburst  or  excessive  flood  is  the 
act  of  God,  but  not  a  somewhat  unusual  freshet.  The  line  of  cleavage  is 
sometimes  difficult  to  fix.  Fire,  unless  from  lightning,  is  held  to  proceed 
in  some  way  from  human  agency,  and  for  this  the  carrier  is  responsible. 
The  public  enemy  is  some  body  or  some  nation  at  war  with  the  government. 
Rioters  do  not  constitute  a  public  enemy  however  powerful  they  may  be, 
unless  definitely  in  revolt  in  an  attack  upon  the  government.  Resistance 
to  the  authorities  in  an  attack  upon  individuals  does  not  constitute  a  mob 
the  public  enemy. 

Acceptance  of  Goods.  The  liability  of  the  carrier  begins  with  the 
acceptance  of  the  goods,  and  when  the  owner  or  his  agent,  the  drayman, 
relinquishes  control  to  the  agents  or  appropriate  servants  of  the  carrier, 
delivery  is  accomplished.  In  some  cases  the  shipper  is  required  to  load, 
and  here  if  the  railroad  fails  to  provide  cars,  goods  in  the  warehouse  are 
then  at  the  carrier's  risk.  In  other  cases,  it  will  depend  upon  agreement 
or  equivalent  custom,  whether  the  railroad  holds  goods  as  warehouseman 
or  carrier.  The  warehouseman  is  not  an  insurer  as  the  carrier  is,  and  is 
liable  only  for  negligence. 

Bill  of  Lading.  On  delivery  the  shipper  is  entitled  to  a  bill  of  lading 
which  is  both  a  receipt  and  evidence  of  the  contract  to  carry.  It  is  gener- 
ally on  printed  forms.  It  is  also  a  symbol  of  title,  and  without  its  presen- 
tation the  carrier  may  refuse  to  deliver  goods  at  the  point  of  destination 
in  order  to  secure  delivery  to  the  proper  person.  The  carrier  cannot  de- 
mand the  surrender  of  the  bill  of  lading,  but  may  require  a  receipt  for  the 
goods  delivered.  The  bill  of  lading  is  assignable,  but  is  not  properly  a 
negotiable  instrument.  As  has  been  stated  elsewhere,  a  draft  is  often 
attached  by  the  seller  or  shipper,  so  that  the  consignee  can  acquire  the 
bill  of  lading  only  by  paying  or  accepting  the  draft  as  may  be  required. 

Special  Cars.  The  carrier  is  not  under  obligation  to  carry  goods  of  an 
unusual  character,  or  requiring  a  special  kind  of  car,  such  as  a  refrigerator 
car  or  oil  tank  car.  He  may  not,  however,  discriminate  by  giving  such 
service  to  one  shipper  and  refusing  it  to  another.  His  duty  to  the  public 
as  a  common  carrier  forbids  this ;  he  is  not  allowed  to  discriminate  be- 
tween individuals. 

Negligence  of  Carrier  or  Shipper.  In  the  carriage  of  freight  it  matters 
not  whether  the  carrier  was  negligent.  If,  however,  any  damage  or  loss 
which  has  occurred  can  be  directly  traced  to  negligence  of  the  shipper, 
from  faulty  packing  of  the  goods,  or  similar  carelessness,  or  from  the 
dangerous  character  of  the  goods,  neither  of  which  the  carrier  would  detect 


11-10        ,  RAILROADS 

in  the  ordinary  prudent  course  of  business,  the  carrier  is  not  responsible, 
but  the  burden  of  proof  rests  with  the  carrier  in  this  case. 

Responsibility  of  Connecting  Lines.  In  the  case  of  through  freight 
over  several  lines,  according  to  the  weight  of  authority  in  the  United 
States,  each  line  is  responsible  for  safe  carriage  over  its  own  lines.  The 
initial  line  in  contracting  for  the  entire  carriage  does  so  in  part  as  agent 
for  the  other  lines  and  does  not  assume  responsibility  for  damage  or  loss 
beyond  its  own  line. 

Time  of  Delivery.  In  the  absence  of  a  special  agreement  to  the  con- 
trary the  carrier  is  responsible  for  delivery  of  the  goods  at  their  destina- 
tion within  a  reasonable  time,  according  to  the  usual  course  of  business, 
with  all  convenient  dispatch ;  in  ordinary  local  freight,  this  does  not  mean 
great  dispatch ;  reloading  at  connecting  points  often  involves  considerable 
delay  "  in  the  ordinary  course  of  business."  For  unreasonable  delay  the 
carrier  is  liable.  In  case  the  consignee  refuses  to  receive  the  goods,  the 
carrier,  as  agent  of  the  consignor  must  protect  the  latter's  interest  by  pru- 
dent action,  perhaps  by  notice  to  the  consignor,  or  by  sale  of  perishable 
goods,  or  such  other  action  as  circumstances  shall  dictate.  If  goods  are 
held  by  consignee's  order,  and  deterioration  or  other  damage  results,  the 
consignee  and  not  the  carrier  is  responsible.  The  evidence  necessary  to 
protect  the  carrier  should  be  in  available  shape.  If  the  delay  is  due  to 
the  act  of  God  or  of  the  public  enemy  the  carrier  is  not  liable. 

Place  of  Delivery.  Ordinarily  the  depot  or  warehouse  of  the  carrier 
will  be  the  place  of  delivery;  the  side  track  for  unloading  may  be  the 
proper  place  for  some  commodities.  Custom  as  to  warehouse  or  side  track 
controls.  It  is  not  customary  in  this  country  to  deliver  to  the  consignee's 
warehouse  as  it  is  in  England.  The  law  varies  in  different  States  as  to 
whether  the  liability  of  the  carrier  ceases  when  the  goods  are  placed  on  the 
platform  or  in  the  warehouse  at  the  place  of  destination,  or  whether  notice 
and  reasonable  opportunity  to  remove  are  essential  to  terminate  the  rail- 
road's duty  as  carrier  and  substitute  that  as  warehouseman.  A  further 
question  may  arise  whether  opportunity  to  remove  includes  opportunity 
for  inspection.  Usage  and  custom  may  determine  this. 

Limitation  of  Liability.  By  express  agreement  the  carrier  may  limit 
his  liability  as  insurer,  for  instance  against  fire.  The  carrier  sometimes 
stipulates  and  contracts  with  the  shipper  that  the  latter  shall  insure  the 
goods,  and  the  consideration  may  be  a  reduction  in  rates.  Such  an  agree- 
ment is  good  against  fire  occurring  from  causes  outside  the  negligence  of 
the  carrier's  servants,  but  not  when  arising  from  such  negligence,  it  is 
against  public  policy  as  contained  in  the  duty  of  the  carrier  to  the  public. 
The  shipper  is  bound  by  the  terms  of  his  bill  of  lading  and  should  read  it. 
The  carrier,  however,  may  not  have  the  right  to  impose  terms  and  may 


RAILROADS  11-11 

be  compelled  to  accept  goods  for  carriage  under  the  law  of  the  common 
carrier. 

Injuries  to  Passengers.  The  responsibility  of  common  carriers  in 
carrying  passengers  is  not  the  same  as  in  the  case  of  freight.  A  passenger 
has  some  capacity  to  care  for  himself.  The  law,  therefore,  is  that  the 
carrier  is  responsible  to  passengers  only  for  injuries  due  to  the  negligence, 
unskilfulness,  or  fault  of  the  carrier  or  its  servants ;  the  mere  occurrence 
of  an  accident  is  not  sufficient.  A  passenger  may  be  ejected  for  non- 
payment of  fare  or  for  other  proper  cause,  but  unnecessary  force  or  rough- 
ness must  not  be  used.  Whether  a  passenger  may  rightfully  resist  under 
circumstances  other  than  of  danger  to  himself  is  not  altogether  settled. 
In  some  States  the  railroad  has  a  statutory  remedy  against  a  passenger  for 
non-payment  of  fare. 

Who  are  Passengers.  Not  only  the  ordinary  traveler,  but  mail  agents, 
postal  clerks,  and  express  messengers  are,  under  the  law,  classed  as  passen- 
gers. A  railroad  employee  may  or  may  not  be  a  passenger,  dependent 
upon  whether  he  is  on  his  way  to  work  or  not.  A  person  who  has  bought 
a  ticket  and  is  in  a  proper  place  preparatory  to  entering  a  train  is  a  pas- 
senger. The  relation  of  passenger  ends  when  the  traveler,  after  alighting, 
has  passed  beyond  the  company's  property,  or  reasonably  ought  to  have 
done  so.  A  loiterer  is  not  a  passenger. 

Contributory  Negligence.  The  proof  of  negligence  is  not  always 
simple,  and  the  question  of  contributory  negligence  on  the  part  of  the 
passenger  complicates  the  situation.  In  some  States  the  absence  of  con- 
tributory negligence  must  be  proved.  The  proof  necessary  to  satisfy  a 
jury  is  likely  to  be  less  where  the  defendant  is  a  great  railroad,  than  where 
he  is  an  individual,  and  this  statement  is  not  intended  as  a  slur  at  the 
jury  system.  For  securing  justice,  there  is,  however,  a  counterbalance 
in  the  financial  ability  of  the  corporation,  and  the  entire  lack  of  it  in  the 
case  of  probably  most  passengers  injured  and  some  necessity  on  their  part 
to  share  any  award  with  their  attorney.  In  case  of  the  death  of  a  passen- 
ger from  accident,  recovery  is  limited  in  many  States,  $5000  being  a  not 
uncommon  figure,  with  an  added  amount  if  death  was  not  instantaneous 
and  there  was  conscious  suffering. 

Limitation  of  Responsibility.  The  attempt  is  made  sometimes  to  limit 
and  define  the  responsibility  of  the  carrier  in  case  of  accident ;  this  may 
appear  on  passes  issued  perhaps  to  members  of  the  family  of  an  employee, 
or  to  some  State  official  required  to  use  or  to  inspect  the  railroad ;  some- 
times a  ticket  specifies  exemption  on  account  of  a  reduced  rate.  In  many 
States  any  agreement  signed  to  release  the  carrier  is  void,  as  against  public 
policy,  and  the  carrier  is  at  least  held  responsible  for  gross  negligence  on 
its  part. 


11-12  RAILROADS 

Baggage.  The  railroad  may,  and  commonly  does,  prescribe  the  amount 
of  baggage  which  may  be  carried  free  by  a  passenger  who  has  bought  his 
ticket,  and  150  Ibs.  is  a  common  amount.  The  railroad  further  often 
prescribes  that  baggage  of  a  value  more  than  $100  will  be  carried  at  the 
owner's  risk.  In  the  absence  of  specific  legislation,  such  a  provision  is 
invalid.  The  traveler  may  lawfully  carry  only  the  personal  baggage 
necessary  in  making  the  trip,  and  ordinarily  limited  to  wearing  apparel, 
and  this  will  vary  considerably  between  the  wife  of  a  millionaire  and  the 
wife  of  a  day  laborer.  A  mechanic  may  carry  his  kit  of  tools.  A  sales- 
man may  not,  however,  carry  a  trunkful  of  samples.  The  baggage  check 
operates  as  a  receipt  and  is  in  many  respects  the  equivalent  of  the  bill  of 
lading  for  freight.  The  passenger  must  accompany  his  baggage. 

Interstate  Rule  for  Baggage.  A  recent  United  States  law  as  to  inter- 
state carriage  of  baggage,  provides  for  a  statement  by  the  passenger,  or 
his  agent,  as  to  the  value  of  baggage  carried,  and  a  provision  for  excess 
payment  for  values  greater  than  $100  per  passenger.  Such  a  law  is  not 
yet  common  for  carriage  within  a  State,  but  the  railroad  has  a  right  to 
stipulate  against  liability  above  a  certain  amount  unless  extra  payment  is 
made. 

Negligence  as  to  Premises.  The  buildings,  structures,  platforms, 
approaches,  and  all  property  available  to  the  public  must  be  suitably  ar- 
ranged and  kept  safe,  suitably  lighted,  and  in  proper  order  and  repair,  not 
only  for  the  use  of  passengers,  but  for  their  friends  who  come  to  meet 
them  or  see  them  off,  and  also  for  the  general  public  who  have  business 
of  any  kind  with  the  railroad  justifying  use  of  the  railroad  facilities. 
This  is  true  particularly  in  and  around  stations.  Reasonable  facilities 
must  be  provided  for  boarding  and  alighting  from  trains. 

Fires.  What  is  the  responsibility  of  railroads  for  fires  produced  by 
sparks  from  the  locomotive  ?  The  railroad  is  a  recognized  and  a  legal  means 
for  carrying  on  business.  Under  the  Common  Law,  if  operated  with  reason- 
able care,  it  is  not  responsible  for  unfortunate  results,  and  may  not  always 
be  liable  for  such  fires.  Unless  by  specific  statute,  the  fact  that  a  spark 
from  the  locomotive  caused  a  fire  is  not  conclusive  against  the  railroad ; 
there  must  have  been  negligence.  If  the  careful  use  of  well-approved 
modern  apparatus,  such  as  spark  arresters,  would  prevent  such  a  result, 
it  may  be  made  to  appear  that  there  was  negligence  if  this  was  not  used. 
Statute  Law  in  many  States  now  provides  either  that  the  railroad  shall 
be  liable,  or  that  the  burden  of  proof  as  to  negligence  shall  be  on  the  rail- 
road. The  laws  of  some  States  specify  that  the  occurrence  of  a  fire  from 
a  spark  from  the  locomotive  is  prima  fade  evidence  of  negligence.  The 
railroad  has  an  obligation  to  keep  its  right  of  way  in  condition  not  to 
spread  fire  to  adjoining  lands,  and  in  some  States  railroads  are  required  to 


RAILROADS  11-13 

plough  fire  guards  to  prevent  fire  from  running.  With  a  fire  once  started 
it  is  negligence  for  the  railroad  not  to  stop  it  if  it  be  feasible  to  do  so.  The 
law,  whether  Statute  Law  or  otherwise,  should  be  understood  with  rela- 
tion to  operation  in  any  given  State. 

Freight  Charges  :  Reasonable  Rates.  The  common  carrier  may  refuse 
to  carry  until  the  lawful  charges  are  paid.  Whether  in  advance  or  under 
the  lien,  the  carrier  has  not  the  right  to  charge  anything  he  pleases ;  he  is 
entitled  to  a  reasonable  charge  only.  What  is  a  reasonable  charge  or  rate  ? 
What  it  costs  the  carrier  for  that  carriage  alone,  over  and  above  the  cost 
of  other  business  carried  on,  plus  a  bare  profit,  constitutes  one  limit  with 
which  the  carrier  is  sometimes  content;  what  the  shipper  can  afford  to 
pay  for  the  service,  and  still  make  a  profit,  is  another  limit.  Between 
these  two  limits  the  range  is  often  very  wide.  For  any  class  of  traffic  the 
carrier  is  entitled  to  some  profit  and  ordinarily  should  receive  enough  to 
cover  a  proper  allowance  for  interest  on  the  cost  of  investment  beyond  the 
bare  cost  of  carriage,  certainly  if  the  business  is  well  handled.  Where  the 
charge  or  rate  gives  due  weight  to  the  ability  of  the  shipper  to  pay  and  still 
make  a  profit,  the  charge  is  said  to  be  based  "  on  what  the  traffic  will  bear/' 
which  is  not  synonymous  ordinarily  with  "  all  the  traffic  will  bear." 

Classification.  As  a  part  of  this  system,  the  custom  is  well  established 
of  charging  more  for  fine  dry  goods  and  wearing  apparel,  for  furniture, 
and  other  goods  of  high  value,  and  less  for  coal,  building  stone,  lumber, 
grain,  and  other  low  priced  goods,  especially  carried  in  carload  lots.  The 
principle  of  what  the  traffic  will  bear  is  involved.  "  Classification  "  of 
this  sort  is  in  the  interest  of  the  shipper,  and  is  not  subject  to  serious  criti- 
cism, unless  as  to  the  details  of  applying  it.  The  United  States  Postal 
Service  adopts  this  basis  in  its  postal  rates. 

Proof  of  Unreasonable  Charges.  Under  such  conditions,  few  railroad 
officials  can  be  sure  that  the  rates  charged  are  well  adjusted ;  the  problem 
is  a  difficult  one.  What  chance  has  a  shipper  to  prove  that  a  rate  charged 
him  is  unreasonably  high?  What  will  it  cost  him  to  try  to  prove  it? 
What  disadvantages  may  come  from  provoking  the  enmity  of  the  carrier? 

Personal  Discrimination.  Discrimination  as  to  classes  of  goods,  or 
"  classification  "  has  been  referred  to.  At  one  time  there  was  much  dis- 
crimination between  individuals.  One  man  or  corporation  in  the  same 
locality  was  charged  more  than  another  for  service  not  distinguishable  as 
differing  one  from  another  in  character ;  this  was  "  personal  discrimina- 
tion," clearly  illegal,  but  very  difficult  to  prove  if  the  carrier  and  the 
favored  shipper  were  discreet. 

Local  Discrimination.  There  existed  also  "  discrimination  as  to  locali- 
ties "  by  which  one  town  or  city  had  lower  rates  than  another  where  no 
sufficient  natural  cause  existed  to  excuse  it.  Where  competition  with 


11-14  RAILROADS 

water  carriers  or  with  other  railroads  existed  there  was  often  good  reason 
for  it ;  but  sometimes,  perhaps  often,  it  was  a  matter  of  favoritism,  or  of 
apparent  (perhaps  real)  advantage  to  the  railroad  to  favor  certain  locali- 
ties. The  practice  was  nevertheless  illegal  in  essence,  but  again  difficult 
to  reach  and  prevent  through  private  effort. 

Government  Control  of  Rates ;  Commissions.  To  cure  or  to  minimize 
these  evils,  the  various  States  have  passed  laws  in  some  cases  directly 
regulating  rates,  but  more  often  providing  a  railroad  commission  (not  always 
with  this  name),  a  part  of  whose  duties  it  is  to  determine  what  are  reason- 
able rates.  More  often  than  not  the  rates  so  determined  have  been  up- 
held by  the  courts;  but  legislatures  and  commissions  have  occasionally 
gone  wild  and  prescribed  rates  which  the  courts  have  found  to  be  in  effect 
confiscatory  and  therefore  illegal. 

Interstate  Commerce  Act.  The  most  important  and  best  known  of 
legislation  of  this  character  is  the  Interstate  Commerce  Act  passed  by  the 
United  States  government  to  control  all  traffic  passing  from  one  State  to 
another.  Railroads  sometimes  charged  ridiculously  large  sums  for  haul- 
ing freight  across  a  State  line,  and  over  this  neither  State  had  jurisdiction. 
In  many  other  ways  some  such  law  was  needed.  Nearly  everything  pro- 
hibited by  this  act  was  already  illegal  under  the  Common  Law,  but  the 
remedy  was  ineffective.  Under  this  Act  penalties  of  fines  and  imprison- 
ment are  imposed,  and  shippers  are  allowed  to  bring  their  complaints  to 
the  Interstate  Commerce  Commission  where  simplicity  of  procedure  and 
of  action  available  to  the  commission  are  advantageous  to  the  shipper. 

Long  and  Short  Haul  Clause ;  Pooling.  Moreover,  in  its  present  form, 
the  act  provides  that  "  it  shall  be  unlawful  "  "to  charge  or  receive  any 
greater  compensation  in  the  aggregate  for  the  transportation  of  passen- 
gers, or  of  like  kind  of  property  for  a  shorter  than  for  a  longer  distance 
over  the  same  line  or  route,  in  the  same  direction,  the  shorter  being  in- 
cluded in  the  longer  distance  "  :  "  Provided,  however,  that  upon  applica- 
tion to  the  Interstate  Commerce  Commission,  such  common  carrier  may 
in  special  cases,  after  investigation,  be  authorized  "  "to  charge  less  for 
longer  than  for  shorter  distances."  The  law  as  originally  passed  used  the 
term  "  under  substantially  similar  conditions."  This  constituted  new  law, 
and  while  points  where  water  competition  existed  were  held  not  to  come 
under  "  similar  circumstances  and  conditions,"  radical  changes  in  railroad 
operation  as  to  charges  became  necessary,  and  the  transcontinental  lines 
terminating  at  the  Pacific  coast  became  nearly  all  (if  not  all)  insolvent 
following  it ;  their  recovery  later,  however,  has  been  complete. 

Pooling.  The  Act  also  specifically  prohibits  the  "  pooling  "  of  rates, 
which  probably  had  always  been  illegal ;  the  railroads  apparently  had  never 
allowed  a  clear-cut  decision  of  this  case  to  be  made  by  the  courts. 


RAILROADS  11-15 

Results  on  Rates.  The  results  of  legislation  have  been  to  largely  do 
away  with  the  evils  connected  with  discrimination  in  rates,  and  also  to 
bring  the  general  level  of  rates  to  a  point  where  the  railroads,  rather  than 
the  shippers,  have  cause  for  complaint. 

Safety  Appliances.  Acts  supplementary  to  the  Interstate  Commerce 
Act  have  required  the  introduction  and  use  of  safety  appliances  in  the 
interests  of  both  the  public  and  the  employees.  Prominent  among  these 
are  automatic  brakes  and  automatic  couplers.  The  complete  regulation 
of  signals  has  not  yet  come  about,  but  has  at  times  seemed  imminent. 

Accounts  and  Statistics.  This  Act  also  provides  for  methods  and  forms 
for  keeping  accounts,  and  also  for  the  filing  of  statistics.  Requirements 
similar  in  character  are  made  by  State  laws  or  the  regulations  of  State 
commissions,  which  also  provide  for  the  inspection  of  bridges  and  other 
structures,  and  for  such  other  regulation  as  may  seem  necessary.  A  force 
of  civil  engineers  and  of  inspectors  is  employed  by  many  State  commissions. 

Valuation.  A  complete  valuation  of  all  the  railroads  of  the  United 
States  has  been  provided  for  and  is  well  under  way  in  this  year,  1917. 
This  work  is  carried  out  under  the  Interstate  Commerce  Commission. 
The  purpose  of  the  valuation  is  still  somewhat  obscure ;  its  requirements 
are  quite  rigid.  Some  advantage  will  come  to  the  railroads  through 
the  enforced  taking  account  of  stock,  which,  however,  is  an  expensive 
process. 

Workmen's  Compensation.  Another  United  States  law  provides  for 
the  compensation  of  railroad  employees  injured  while  engaged  in  inter- 
state commerce.  Many  States  have  similar  laws  which  apply  to  em- 
ployees generally,  railroad  employees  among  them  not  singled  out. 

Eight  Hour  Day.  An  Act  known  as  the  Adamson  Law,  passed  by  Con- 
gress in  1916,  provides  that  an  eight  hour  day  shall  be  the  basis  for  pay- 
ment of  train  employees  and  perhaps  of  other  railroad  employees,  and 
forbids  an  immediate  decrease  of  pay.  This  law  was  passed  while  a  strike 
of  four  powerful  brotherhoods  of  train  employees  was  imminent  and  at  the 
demand  of  the  brotherhood  heads,  who  refused  arbitration  of  their  de- 
mands, and  has  been  held  by  the  Supreme  Court  to  be  constitutional. 

State  Laws.  Not  only  are  there  United  States  laws  governing  and 
regulating  interstate  commerce,  but  the  individual  States  have  passed  a 
multitude  of  laws  regulating  rates,  taxation,  and  various  other  matters. 

Separation  of  Grades.  As  has  been  noted  above,  much  work  has  been 
done  in  recent  years,  especially  in  more  populous  communities,  in  separat- 
ing the  grades  of  highways  and  railroads,  and  some  of  the  States  have 
made  provision  for  the  apportionment  of  the  expense,  and  for  the  appoint- 
ment of  special  commissions  to  determine  the  details  as  well  as  to  pass 
upon  general  schemes  presented  for  such  projects. 


11-16  RAILROADS 

Demand  on  Officials'  Time.  The  various  laws  requiring  action  by 
railroad  officials  and  the  many  hearings  before  legislative  committees 
and  commissions  constitute  a  serious  drain  upon  the  time  and  strength 
of  the  higher  railroad  officials.  In  addition  to  the  requisite  knowledge  of 
the  technical  railroad  matters  under  their  charge,  these  officials  must  have 
a  considerable  understanding  of  the  law  applying  to  railroads,  the  greater 
part  of  which  is  Statute  Law,  and  which  shows  changes  almost  every  year, 
sometimes  changes  of  great  importance.  A  careful  study  and  a  good  work- 
ing knowledge  of  the  laws  of  the  States  in  which  a  railroad  operates  is  of 
great  importance  to  the  operating  or  managing  official  who,  however,  can 
better  appreciate  Statute  Law  if  he  has  a  good  comprehension  of  the 
Common  Law  as  a  groundwork,  which  it  is  the  purpose  of  this  treatise  to 
afford. 

There  are  questions  of  consolidation,  leasing  of  lines,  taxation,  land 
grants,  municipal  aid,  federal,  State,  or  municipal  regulation,  and  many 
others  concerning  which  the  services  of  an  experienced  lawyer  are  proper 
and  necessary,  and  which  can  feasibly  be  referred  to  him. 


CHAPTER  XII 
THE  ENGINEER'S  LEGAL  RELATIONS  WITH  OTHERS 

Engineer's  Positions  and  Relations.  The  engineer  may  occupy  the 
position  of  employer  of  other  engineers ;  he  may  be  the  employee  of  another 
engineer ;  he  may  be  the  employee  of  a  municipality,  of  some  other  corpora- 
tion, or  of  some  person,  or  of  some  association  of  persons.  As  an  engineer 
in  general  practice,  he  may  be  the  agent  of  others,  whether  corporations 
or  individuals ;  he  may  engage  in  construction  work  as  contractor.  As  a 
manufacturer  of  machinery,  apparatus,  appliances,  or  structures,  he  may 
occupy  the  position  of  seller.  As  a  user  of  such  articles  he  may  be  a  buyer. 
He  may  exercise  the  special  function  of  an  expert  witness  in  court  or  in 
hearings  before  some  commission.  He  may  be  selected  as  arbitrator  to 
settle  some  dispute.  As  consulting  engineer,  he  may  be  an  adviser  of 
his  client  upon  many  business  questions. 

The  nature  of  the  operations  directed  by  him  also  brings  him  into  such 
relations  with  the  general  public  that  the  engineer's  duties  and  the  public's 
rights  must  be  properly  understood  and  regarded.  The  relations  of  the 
engineer  to  others  are  thus  extensive  and  varied,  and  the  chapters  preceding 
are  intended  to  deal  somewhat  with  these  relations  and  the  rights  and 
duties  connected  with  them ;  both  the  engineer's  own  rights  and  duties 
and  those  of  others  with  respect  to  him. 

Contracts  for  Services.  Unless  the  engineer  is  a  manufacturer,  his 
income  depends  upon  some  sort  of  express  or  implied  contract  for  his 
services.  His  income  or  remuneration  may  be  upon  a  salary  basis ;  for  a 
bill  rendered,  dependent  upon  the  amount  of  service  of  the  engineer  and 
his  employees;  for  a  lump  sum;  based  upon  a  percentage  of  cost;  or 
upon  a  contingent  fee.  There  may  be  other  unusual  forms  of  compensation. 

In  many  cases,  a  written  contract  for  services  seems  desirable.  When 
a  young  engineer  is  employed  by  the  day  or  week  or  month  without  a 
specified  term  of  service,  a  written  contract  is  not  very  necessary.  The 
rate  of  wages  is  soon  established  and  permanent  employment  has  not  been 
agreed  to. 

Formal  Contracts.  When  an  important  position,  at  a  large  salary,  is 
to  be  assumed,  either  a  formal  contract  should  be  made,  or  an  equally 

12—1 


12—2          ENGINEER'S  RELATIONS  WITH  OTHERS 

clear  arrangement  be  made  by  an  interchange  of  letters  sufficient  to  create 
a  legal  contract.  This  seems  particularly  desirable  when  the  engineer 
resigns  one  good  position  to  accept  another. 

Bill  Rendered.  Where  services  are  to  be  paid  for  on  bill  rendered, 
either  there  should  be  an  agreement  as  to  the  rate,  or  else  custom  should 
so  well  fix  the  value  of  services  that  a  dispute  of  the  bill  would  be  improb- 
able, and  quite  unlikely  to  be  successful.  The  credit,  general  standing,  and 
character  of  the  client  should  be  known  and  be  satisfactory  in  any  such  case. 

With  New  Corporations.  An  engineer  employed  by  the  officers  of  a 
newly  organized  corporation  should  have  some  assurance  that  he  is  legally 
employed,  unless  his  personal  knowledge  of  these  officers  gives  him  adequate 
assurance  that  his  services  will  be  paid  for.  When,  however,  without 
formal  contract,  his  services  are  rendered  with  the  knowledge  of  the  proper 
officers  and  accepted  and  used  by  the  board  of  directors  the  company  is 
bound. 

Associations  of  Individuals.  Previous  to  the  inauguration  of  im- 
portant operations,  individuals  often  get  together  and  employ  an  engineer 
to  advance  their  interests  in  opposition  to  the  scheme  of  a  railroad,  or  a 
city,  or  some  private  corporation.  In  most  cases  of  this  sort  the  members 
thus  associated  assume  no  financial  responsibility  and  the  engineer  em- 
ployed should  protect  himself  by  a  written  agreement  with  one  or  more  of 
them  whose  financial  ability  is  sufficient  to  furnish  suitable  protection. 

Architect's  Compensation.  The  compensation  of  an  architect  very 
commonly  is  by  custom  or  agreement  a  percentage  of  the  cost  of  the  work. 
Unless  there  are  special  provisions  to  the  contrary,  the  owner  pays  the 
bill  even  though  the  contract  may  specify  that  the  architect  is  the  agent 
neither  of  the  owner  nor  of  the  contractor.  Custom  seems  to  be  clear  upon 
this  point. 

Architects  are  often  called  upon  to  furnish  competitive  plans,  and  the 
provision  frequently  is  "no  pay  if  not  accepted,"  or  to  be  paid  for  "  on 
adoption  of  plans  "  or  "  if  we  decide  to  build,"  or  on  condition  that  the 
structure  "  can  be  built  for  a  certain  sum."  This  is  a  contingent  fee  and 
sometimes  the  contingency  never  happens.  The  architect  should  have, 
in  some  way,  a  proper  understanding  of  the  terms  before  deciding  whether 
to  furnish  plans. 

OWNERSHIP  OF  PLANS 

Ownership  of  Books  and  Plans.  As  to  the  ownership  of  note  books 
and  drawings,  in  the  final  analysis  custom  may  often  control.  In  building 
contracts  it  is  now  customary  to  provide  that  the  plans  belong  to  the 
architect.  The  owner  of  a  private  residence  does  not  ordinarily  want  his 
plan  duplicated.  If  the  owner  wishes  to  use  the  same  plan  for  a  number 


ENGINEER'S  RELATIONS  WITH  OTHERS          12-3 

of  apartment  houses,  he  should  arrange  with  his  architect  to  that  effect. 
When  competitive  plans  are  invited  there  should  be  some  understanding 
as  to  ownership  after  selection  or  award. 

Copyright  of  Plans.  Whether  an  architect  or  engineer  may  copyright 
plans  seems  somewhat  in  doubt.  In  any  case  it  is  not  customary  for  him 
to  do  so.  In  this  connection,  it  may  be  stated  that  the  use  of  plans  by 
the  owner  does  not  amount  to  publication  and  so  does  not  authorize  their 
use  by  others  on  the  basis  of  publication  without  copyright.  Maps  and 
other  prior  publications  may  be  used  by  an  engineer  for  compilation  but 
must  not  be  used  in  a  servile  manner ;  there  must  be  adaptation  in  some 
new  way. 

Note  Books.  An  engineer  in  general  practice  substantially  always 
uses  his  own  note  books  and  keeps  them.  Custom,  no  doubt,  would 
sanction  this  and  make  it  legal.  The  owner  ordinarily  has  no  use  for 
them.  A  municipality,  or  a  mill  corporation  which  employs  an  engineer 
in  general  practice  to  do  some  special  engineering  work  may  properly 
desire  to  retain  the  note  books,  and  an  agreement  to  that  effect  should 
be  made  so  as  to  assure  the  desired  result.  An  individual  or  a  corporation 
employing  an  engineer  on  a  salary  would  properly  expect  to  retain  all  note 
books  and  plans. 

Inventions.  An  engineer  or  a  mechanic  who  makes  inventions  directly 
in  line  with,  and  as  a  direct  part  of  his  employment,  does  not  acquire 
title  to  them;  they  belong  to  the  employer.  When,  however,  his  em- 
ployment is  not  to  produce  inventions,  and  they  are  no  more  than  sug- 
gested by  his  employment,  they  would  ordinarily  belong  to  him.  As 
stated  elsewhere,  inventions  made  outside  of  hours  and  not  of  a  kind  for 
which  the  engineer  is  directly  hired,  belong  to  the  employee.  There  are 
bound  to  be  uncertain  cases  close  to  the  line. 

Engineering  Skill  Required.  Where  an  engineer  or  architect  is  em- 
ployed in  a  private  capacity,  he  undertakes  to  bring  to  his  work  the  average 
skill  of  those  engaged  in  a  like  kind  of  work.  If  he  makes  a  specialty  of 
some  class  of  engineering,  as  structural,  or  as  sanitary,  he  undertakes  to 
use  the  average  skill  of  others  who  make  a  similar  specialty  in  such  class 
of  engineering.  He  does  not  in  either  case  insure  absolute  accuracy,  unless 
by  custom  checks  are  possible  and  in  regular  use  which  allow  absolute 
accuracy  to  be  secured. 

What  Service  is  Guaranteed.  The  engineer  does  guarantee: 
1.  Reasonable  learning,  skill,  and  experience.  2.  The  use  of  proper 
care  and  diligence.  3.  The  application  of  his  best  judgment.  4.  Ab- 
solute honesty.  The  burden  of  proof  is  on  him  who  disputes  the  engineer's 
skill  and  other  qualifications.  The  engineer  is,  of  course,  liable  if  negligence 
on  his  part  can  be  proved. 


12—4         ENGINEER'S  RELATIONS  WITH  OTHERS 

What  an  Engineer  may  Attempt.  If  an  engineer  of  good  training  and 
experience  is  called  upon,  as  often  happens,  to  carry  out  work  not  alto- 
gether within  the  line  of  previous  experience,  and  he  enters  upon  his 
duties  modestly  and  with  earnest  purpose  to  succeed,  it  is  probable  that 
strong  evidence  would  be  necessary  to  hold  him  liable  for  faults  in  his 
work  if  there  seemed  reasonable  probability  of  success  when  he  attempted 
the  work.  An  engineer  who  never  attempts  work  which  he  has  not  already 
demonstrated  his  ability  to  carry  out,  is  of  little  use  in  the  world.  Where 
the  result  of  failure  is  likely  to  prove  serious  and  the  probability  of  success 
definitely  doubtful,  the  engineer  should  decline  the  service,  unless  the 
necessity  seems  imperative  with  no  better  alternative  apparently  available. 

Public  Officers.  In  the  case  of  engineers  who  are  public  officers,  the 
general  rule  is  that  in  the  exercise  of  judicial  functions,  public  officers  are 
not  liable  for  faults  in  their  action.  For  ministerial  duties  which  are 
clear  and  for  which  funds  and  other  resources  are  available,  the  officer  is 
liable  for  failure  to  perform  his  duty.  The  repairs  of  highways  or  of 
bridges  have  in  some  cases  been  held  to  be  duties  of  this  sort.  In  the 
practical  application  of  this  principle,  some  difficulty  is  experienced,  and 
in  some  States  the  engineer  has  been  held  liable  and  in  others  not.  Where 
many  highways  or  bridges  need  repairs  and  discretion  is  used  as  to  which 
shall  come  under  the  appropriation,  judicial  functions  may  appear  to 
exist.  The  engineer  may  profitably  look  up  the  law  as  to  his  liability, 
in  the  State  where  he  holds  office. 

Error  in  Survey.  In  one  case  a  City  Surveyor  made  an  error  in  a 
survey  which  by  law  he  was  required  to  make  for  a  land  owner,  and  it 
appeared  that  he  used  ordinary  care  and  skill.  He  was  held  not  liable 
on  account  of  the  error. 

Lien  for  Services.  Whether  an  architect  or  engineer  has  a  mechanic's 
lien  on  a  structure  upon  which  he  has  been  engaged,  is  somewhat  uncertain. 
Unless  provided  clearly  by  statute,  an  architect  or  engineer  who  simply 
designs  will  probably  be  held  not  to  be  entitled  to  the  lien.  An  engineer 
who  is  upon  the  ground  giving  instructions,  inspecting  the  work,  doing 
work  not  altogether  dissimilar  to  that  of  a  foreman,  will  be  entitled  to  a 
lien  in  many,  but  not  all  States.  The  same  general  rule  will  apply  where 
Statute  Law  gives  precedence  to  labor  debts. 


ENGINEER   AND   CONTRACTOR 

Engineer's  and  Contractor's  Relations.  The  relations  between  the 
engineer  and  the  contractor  deserve  comment.  To  a  large  and  a  growing 
extent,  the  contractor  now  is  also  an  engineer.  Most  large  contracting 
concerns,  if  not  directly  controlled  by  men  of  engineering  training,  regularly 


ENGINEER'S  RELATIONS  WITH  OTHERS 

employ  engineers  in  connection  with  their  contract  work.  It  is  true  of  a 
considerable  part  of  such  work  that  the  engineer  is  responsible  only  for 
the  ultimate  design,  and  the  contractor  for  the  execution.  The  complete 
success  of  the  work  depends  commonly  as  much,  and  frequently  more, 
upon  the  contractor's  employment  of  methods  and  processes  of  handling 
the  work  than  upon  the  design.  Both  engineer  and  contractor  are  neces- 
sary to  the  work,  and  the  best  results  come  when  the  two  are  working  in 
harmony. 

Honesty  and  Fairness.  Most  contractors  are  honorable  and  most 
engineers  are  fair.  Some  contractors  have  at  times  attempted  to  scamp 
their  work  and  to  employ  sharp  practices  to  profit  at  the  expense  of  the 
railroad  or  city,  and  some  of  the  drastic  provisions  found  in  some  modern 
contracts  have  been  introduced  after  an  experience  which  suggested  such 
a  remedy.  Young  engineers  often  err  in  zeal  for  their  clients  and  older 
engineers  are  human  enough  to  shrink  from  involving  their  clients  in 
expense  due  to  lack  of  foresight  or  to  some  lapse  on  their  part.  Contrac- 
tors have  frequently  shouldered  some  slight  loss  rather  than  subject  the 
engineer  to  mortification  of  this  sort.  In  general,  however,  both  con- 
tractors and  engineers  want  to  do  the  right  thing. 

Starting  fresh  on  a  new  project,  the  assumption  should  be  that  the 
contractor  is  honorable  and  that  the  engineer  is  fair.  It  is  nevertheless 
the  duty  of  the  engineer  to  use  methods  adapted  to  secure  good  work  for 
his  client.  Experience  has  established  the  necessity  for  systematic  in- 
spection so  that  work  not  up  to  standard  shall  not  be  accepted,  whether 
the  defect  be  due  to  lack  of  skill  or  care,  or  to  the  undue  zeal  of  some  fore- 
man who  is  selected  mainly  for  his  ability  to  advance  his  employer's  in- 
terests by  pushing  work,  a  quality  which  may  naturally  lead  to  occasional 
neglect  in  the  quality  of  performance. 

Engineer's  Duty  to  Contractor.  It  is  the  engineer's  duty  to  control  the 
work  and  the  contract  should  secure  to  him  the  necessary  authority ;  his 
decision  should  be  final  certainly  as  to  quantity  and  quality  of  work.  His 
position  as  to  such  matters  is,  however,  substantially  that  of  an  arbitrator 
or  umpire,  irrespective  of  who  employs  or  pays  him.  The  engineer  en- 
gaged in  construction  work  may  feel  that  he  represents  more  directly  his 
employer  in  securing  the  proper  quality  of  work;  but  in  estimating 
quantities,  measurements  are  seldom  sufficient  and  complete  enough  to  as- 
sure perfect  results,  and  in  making  enough  of  them  only  to  secure  results 
substantially  correct,  it  seems  both  moral  and  legal  that  the  quantities 
shall  be  certainly  fair  to  the  contractor ;  where  additional  measurements 
are  dispensed  with,  it  is  to  save  cost  to  the  employer.  Further  than  this 
it  seems  that  the  contractor  has  a  clear  legal  as  well  as  a  moral  right  to 
stakes,  facilities,  and  information,  both  in  time  and  form,  such  as  to  give 


12-6          ENGINEER'S  RELATIONS  WITH  OTHERS 

him  the  most  favorable  opportunity  reasonable  to  profitably  and  success- 
fully carry  on  and  complete  his  work. 

Friendly  Relations.  The  engineer  and  contractor  should  properly  be 
on  friendly  terms.  Under  present  conditions,  however,  it  may  be  mis- 
understood if  the  relations  are  exceptionally  cordial.  The  acceptance  by 
the  engineer  of  favors  on  a  large  scale  from  the  contractor  may  suggest 
illegal  relations  and  should  be  avoided.  A  contractor  often  offers  to  the 
engineer  a  cigar,  or  at  the  close  of  a  contract  a  box  of  cigars,  and  without 
ill  intent.  One  engineer  preferred  to  offer  the  contractor  as  many  cigars 
as  came  the  other  way,  but  without  accurate  count.  The  contractor 
seemed  not  in  a  position  to  refuse  the  cigars  offered.  Correct  relations 
in  this  case  were  naturally  suggested,  and  thoroughly  friendly  relations 
were  maintained  with  no  discoverable  loss  of  self  respect  on  either  side. 

THE  ENGINEER  AS  AN  EXPERT 

Functions  of  Expert.  The  engineer  as  an  expert  may  be  employed  in 
various  capacities,  not  all  of  them  in  connection  with  legal  controversies, 
but  in  cases  not  directly  involving  design  or  construction  work  on  his  part. 

He  may  be  consulted  where  an  investigation  of  values  or  costs  is  de- 
sired, or  where  the  merits  of  some  development  of  natural  resources  is  in 
question,  as  well  as  upon  business  matters  where  an  analytical  treatment 
of  a  subject  is  required. 

In  legal  controversies  he  may  be  consulted,  even  before  a  suit  is  in- 
stituted, as  to  the  bearing  of  technical  questions  involved ;  he  may  assist 
in  the  preparation  of  the  case ;  at  the  trial  he  may  assist  the  lawyer  in  the 
examination  of  witnesses ;  or  he  may  serve  as  an  expert  witness. 

Investigation  to  Precede  Opinion.  Before  committing  himself,  when 
consulted,  the  engineer  should  satisfy  himself  as  to  the  controlling  facts 
and  should  make  such  investigation  as  seems  necessary.  In  some  cases 
his  client's  statement  of  facts  may  be  inexact,  incomplete,  or  inexpert,  to 
the  extent  of  being  misleading.  The  engineer  should  not  be  quick  to 
advise  without  a  proper  investigation  and  should  stand  ready  to  advise 
against  his  client's  bias  if  such  advice  is  wise.  In  some  cases  it  is  his  duty 
to  advise  a  conference  or  arbitration  rather  than  a  suit. 

Ethics.  In  many  legal  controversies,  both  parties  are  honest  but  a 
difference  of  opinion  exists  as  to  the  bearing  of  the  law  or  of  scientific 
principles  upon  the  case.  Some  conscientious  lawyers  refuse  to  prosecute 
a  case  unless  fully  satisfied  of  its  justice,  but  will  defend  any  suit,  and  see 
that  the  client's  interests  are  adequately  protected.  An  engineer  may 
take  a  similar  position.  If  his  client  is  liable  to  suffer  injury  unless  well 
advised,  the  engineer  may  properly  act  to  protect  any  rights  his  client 


ENGINEER'S  RELATIONS  WITH   OTHERS          12-7 

has.  He  should,  however,  not  hesitate  to  inform  his  client  as  to  the 
hopelessness  or  injustice  of  his  case  and  should  stand  ready  to  withdraw 
if  that  appears  to  have  become  his  duty. 

An  engineer  sometimes  declines  to  go  upon  the  stand  because  cross- 
examination  is  likely  to  bring  out  some  weakness  in  his  client's  case,  and 
yet  he  may  feel  free  to  advise  the  lawyer  in  court  in  order  to  establish  a 
serious  weakness  in  the  opponent's  case.  A  man  with  high  standards  will 
act  or  refuse  to  act  as  seems  to  him  right.  A  man  with  low  standards 
will  not  be  guided  by  anything  written  here. 

Opinions.  With  relation  to  his  work  as  an  expert  witness  it  has  been 
stated  in  a  previous  chapter  that,  in  general,  witnesses  may  not  state 
opinions  except  in  the  case  of  experts.  Engineers  often  serve  as  experts 
and  thus  may  express  opinions.  Expert  opinion  is  allowable  when  the 
subject  matter  has  the  nature  of  a  science  or  trade,  which  requires  study 
or  experience,  or  both,  to  understand  it,  so  that  persons  inexperienced  in 
the  art  or  science  who  constitute  the  jury  are  likely  to  be  left  in  doubt 
after  all  the  facts  are  proved,  unless  aided  by  expert  opinion.  Whether 
such  expert  opinion  may  be  introduced  rests  with  the  judge.  The  jury 
may  or  may  not  be  convinced  by  it,  but  will  give  to  it  such  weight  as  they 
see  fit  and  decide  upon  questions  of  fact  accordingly. 

Qualifying.  The  expert  must  "  qualify."  He  must  state  the  skill, 
knowledge,  or  experience  he  possesses,  which  as  a  rule  he  has  gained  in  his 
trade,  profession,  or  calling.  In  some  cases  he  is  qualified  by  study  or 
scientific  research  rather  than  by  direct  experience.  Teachers  of  natural 
sciences  have  often  been  experts  by  virtue  of  their  study. 

Who  are  Experts.  Locomotive  engineers  may  be  experts  on  many 
matters  in  the  running  of  trains,  as  may  also  railroad  conductors,  brake- 
men,  and  others  upon  points  with  which  they  are  familiar.  Civil  engineers 
or  mechanical  engineers  who  have  made  themselves  familiar  with  the 
theory  of  brake  resistances  and  know  what  practical  results  have  been 
reached,  are  competent  to  testify  as  to  the  distance  in  which  a  given  train 
could  be  stopped.  This,  however,  is  not  strictly  opinion  evidence,  cer- 
tainly if  the  distance  is  stated  within  limits  and  not  exactly. 

Cross-Examination  on  Qualifications.  Cross-examination  of  the  ex- 
pert as  to  qualifications  is  to  be  expected,  and  a  favorite  scheme  is  to 
ask  the  witness  if  he  is  expert  upon  some  very  narrow  line  of  the  field.  A 
witness  who  well  understood  all  about  chains  was  asked  if  he  was  an 
expert  on  "  foundry  chains,"  a  chain  in  a  foundry  being  in  question. 
Not  having  given  especial  attention  to  any  chain  used  in  a  foundry,  and 
having  a  fine  conscience,  he  said  "  no  "  and  was  promptly  excused.  He 
should  have  stated  that  he  thoroughly  understood  chains  and  foun- 
dry chains  were  chains,  and  could  then,  if  pushed,  answer  "  yes."  The 


12-8          ENGINEER'S  RELATIONS  WITH  OTHERS 

engineer  should  consider  carefully  what  he  will  state  as  his  qualifications, 
and  weigh  carefully  his  answers  in  cross-examination  as  to  these. 

Court  Decides  on  Qualifications.  The  court  is  the  sole  judge  of  the 
qualifications  of  a  witness  as  an  expert,  that  is  as  to  whether  he  shall  be 
allowed  to  testify  as  an  expert.  The  jury,  however,  is  the  sole  judge  as 
to  the  weight  or  credit  to  be  given  to  his  testimony  as  to  opinions,  or  as 
to  scientific  facts  or  principles  propounded  by  an  expert. 

Opinions  in  Disfavor.  Opinion  evidence  is  in  considerable  disfavor. 
It  seems  possible,  in  many  important  cases,  to  obtain  the  opinions  of 
experts  in  support  of  either  side,  and  often  diametrically  opposed  to  each 
other.  Medical  men  and  handwriting  experts  often  disagree,  as  do  also 
engineers. 

Scientific  Facts  or  Principles.  The  evidence  of  engineering  experts, 
to  a  large  extent,  is  not  "  opinion  "  evidence.  Quite  largely  the  evidence 
is  a  statement  of  scientific  facts  or  principles  which  apply  to  the  case  in 
hand.  The  function  of  the  engineer,  more  often  than  not,  is  to  discover 
and  correlate  the  scientific  principles  and  facts  which  apply,  and  to  arrange 
them  in  such  simple  and  clear  form  as  to  convince  the  jury.  None  but 
an  expert  could  so  present  them  and  establish  their  bearing. 

Measure  of  Value  of  Evidence.  An  attorney  stated  to  a  witness  in 
his  first  expert  case  that  "  the  value  of  your  evidence  will  depend  upon 
its  soundness  and  the  reasons  you  present  to  support  it."  The  evidence 
was  as  to  values  to  various  parties  of  an  improvement  determined  upon. 
These  were  established  from  statistical  data,  and  by  logical  deductions 
from  them.  From  these  the  commissioners  who  heard  the  case  were 
able  to  draw  conclusions  without  attaching  much,  if  any,  importance  to 
the  quality  of  the  witness  as  an  expert.  The  facts  presented  were  what 
counted.  Except  by  an  expert,  these  facts  would  not  have  been  presented. 

Expert  but  not  Opinion.  A  statement  by  a  surveyor  or  engineer  as 
to  the  amount  of  land  which  would  be  flowed  at  a  given  height  of  water 
may  be  expert,  but  certainly  is  not  opinion  evidence  if  the  proper  measure- 
ments and  computations  have  been  made.  The  statement  is  one  of  a 
scientific  fact. 

A  competent  civil  or  a  mechanical  engineer  may  express  an  opinion 
of  the  cause  of  an  accident,  but  his  testimony  is  far  more  convincing  if  he 
recites  facts  within  his  knowledge  which  lead  him  to  the  opinion  he  ex- 
presses. If  the  facts  lead  the  jury  to  the  same  result,  his  opinion  is  a 
negligible  part  of  the  case. 

Subordinate  Opinions.  So  far  as  possible  the  engineer  should  arrange 
his  evidence  in  such  form  that  his  personal  opinion  is  not  the  deciding 
element.  His  judgment  or  opinion  may  determine  what  scientific  facts 
or  theories  are  to  be  applied  in  any  case  in  hand,  but  any  initiative  of  such 


ENGINEER'S  RELATIONS  WITH   OTHERS          13—9 

sort  may  still  leave  the  jury  to  accept  the  theory  on  its  merits  rather  than 
as  the  engineer's  opinion  purely. 

Values.  Statements  as  to  values,  or  as  to  the  probable  effect  of  certain 
constructions,  may  be  purely  opinions.  They  may  often  be  the  logical 
result  of  scientific  facts  recited  by  the  experts.  Values  of  public  utilities 
are  often  fixed  by  earnings  or  costs,  or  both  combined,  and  a  jury,  with 
the  facts  suitably  presented,  often  becomes  capable  of  forming  a  correct 
judgment  from  these  facts. 

Attitude  as  Witness.  When  upon  the  witness  stand,  the  answers  of 
the  expert  witness  should  appear  to  be  clear,  frank,  fair,  and  free  from 
bias.  They  should  also  be  so  framed,  if  possible,  that  the  inexpert  jury 
may  understand  them.  There  may  be  cases  where  a  juror's  respect  for 
expert  testimony  will  be  in  proportion  to  his  inability  to  understand  such 
superior  wisdom,  but  it  will  not  do  to  count  on  this  with  twelve  hard- 
headed  men.  Before  a  commission,  clearness  is  equally  desirable. 

Cross-Examination.  Under  cross-examination,  ordinary  witnesses  are 
sometimes  asked  if  they  had  a  "  rehearsal  "  with  their  attorney.  Such  a 
question  would  rarely  be  asked  of  an  expert,  and  a  statement  that  a  con- 
sultation was  necessarily  had  would  not  prejudice  the  case.  A  witness 
under  cross-examination  should  keep  cool,  consider  well  his  answers, 
should  not  be  driven  into  a  show  of  anger,  should  not  attempt  to  be 
"  smart,"  and  should  avoid  the  appearance  of  bias  even  under  cross- 
examination. 

Yes  or  No.  An  answer  "  yes  "  or  "  no  "  may  be  demanded  and  in 
most  cases  must  be  given.  Where  either  answer  would  convey  the  wrong 
impression,  the  witness  may  sometimes  ask  the  protection  of  the  court 
against  answering  either  way.  He  may  sometimes  answer  "  yes  and  no  " 
if  this  is  appropriate  and  let  the  opposing  lawyer  ask  an  explanation  if  he 
wants  to  do  so.  An  illustration  of  a  question  to  which  an  answer  "yes  "  or 
"no  "  is  misleading  is :  "  Have  you  quit  your  habit  of  beating  your  wife?  " 

Testing  Expert's  Knowledge.  The  cross-examination  may  seek  to 
discredit  the  expert,  and  general  questions  not  directly  applicable  to  the 
case  may  properly  be  asked  to  determine  his  qualifications.  Questions 
requiring  computations  need  not  be  answered  off-hand,  but  a  willingness 
to  compute  and  testify  later  may  be  appropriate.  It  happens,  in  rare 
cases,  that  an  engineer  states  the  results  of  a  computation  and  later  dis- 
covers an  error;  a  return  to  the  stand  to  correct  the  error  is  the  proper 
course,  and  probably  will  not  injuriously  affect  other  testimony  given. 

Refreshing  Memory.  Where  extensive  computations  have  been  made, 
the  witness  may  have  memoranda  with  him  and  use  them  "  to  refresh  his 
memory."  It  is  a  necessity  in  this  case.  An  engineer  may  always  use 
memoranda  to  refresh  his  memory.  He  may  testify  that  he  remembers 


12—10        ENGINEER'S  RELATIONS  WITH  OTHERS 

the  memoranda  to  be  correct,  or  it  will  serve  if  he  remembers  that  the 
memoranda  were  correct  when  made. 

Maps  and  Photographs.  He  may  introduce  maps  or  photographs  as 
evidence  if  he  can  state  that  they  are  correct.  He  may,  however,  use 
them  to  illustrate  his  testimony  without  establishing  their  accuracy.  In 
the  first  case,  as  evidence  the  maps  or  photographs  are  commonly  made 
exhibits,  but  in  the  latter  case  they  are  not. 

Books  of  Science.  The  engineer  may  not  read  books  of  science  as 
evidence.  He  may,  perhaps,  be  allowed  to  cite  the  opinions  or  statements 
of  writers  of  books,  but  these  must  have  become  his  own  opinions,  or  else 
his  conclusions  or  statements  of  scientific  facts,  in  order  to  be  admissible 
in  evidence. 

In  cross-examination,  books  of  science  may  be  used  to  test  the  expert's 
knowledge  of  the  subject,  in  an  effort  to  discredit  him,  and  a  witness  not 
well  grounded  may  appear  to  disadvantage  in  such  case. 

Opinion  on  Testimony  in  Case.  The  expert  witness  often  sits  through 
the  trial  and  hears  all  the  testimony  given  and  is  then  asked  his  opinion, 
perhaps  as  to  the  cause  of  an  accident  testified  to.  If  there  is  no  conflict- 
ing testimony  he  may  give  his  opinion.  If  there  is  any  conflicting  testi- 
mony, he  cannot  give  an  answer  which  depends  upon  his  accepting  or 
rejecting  any  part  of  such  conflicting  testimony.  The  jury  only  is  per- 
mitted to  pass  upon  the  credibility  of  witnesses  and  the  truth  of  testimony 
presented.  If  the  expert  has  made  an  investigation  he  may  have  based 
his  opinion  upon  that,  and  his  opinion  may  not  have  changed  as  the  result 
of  any  testimony  he  had  listened  to,  but  he  can  go  no  farther  than  this ; 
he  cannot  discriminate  between  testimony  offered  by  others. 

Advice  to  Experts.  The  following  advice  as  to  expert  testimony  was 
many  years  ago  made  to  the  American  Society  of  Civil  Engineers  by  a 
distinguished  engineer  and  expert,  parts  of  which  have  been  referred  to 
elsewhere  in  this  chapter : 

"That  the  court  always  understands  that  an  engineer  has  been  previously 
advised  in  regard  to  questions  upon  which  his  direct  examination  will  be  made, 
and  that  he  has  prepared  himself  by  study  and  reasoning  to  apply  to  the  case  in 
hand  all  of  the  scientific  principles  which  are  necessary  to  elucidate  it. 

"It  is,  therefore,  unwise  to  attempt  to  conceal  from  the  court  that  the  engineer 
has  been  in  consultation  with  the  lawyers  upon  the  side  upon  which  he  has  been 
called,  or  that  he  has  been  paid  or  is  to  be  paid  professional  prices  for  his  services. 

"No  provocation  on  the  part  of  a  lawyer  will  justify  an  uncourteous  reply,  and 
it  is  unwise  to  give  back  a  sharp  or  witty  answer. 

"If  the  lawyer  uses  improper  language  in  addressing  the  witness,  the  latter 
may  appeal  to  the  judge. 

"If  questions  requiring  study  and  research  are  put  to  the  witness,  he  may 
reply,  'I  have  not  considered  the  subject  under  that  aspect  sufficiently  to  reply/ 


ENGINEER'S  RELATIONS  WITH  OTHERS 

or  'I  shall  require  a  little  consideration  before  I  can  reply;   I  will  make  a  note  of 
your  question,  and  answer  it  as  soon  as  possible.' 

"A  witness  is  often  called  upon  to  express  an  opinion  on  some  subject  which  is 
a  matter  of  exact  or  approximate  measurement  and  calculation ;  it  is  often  impos- 
sible for  him  to  make  such  calculations  accurately  in  the  presence  of  a  roomful  of 
people.  His  proper  course,  under  such  circumstances,  is  to  make  a  note  of  the 
question  and  inform  the  counsel  that  he  will  make  the  calculation  and  give  it  in 
writing.  In  strict  law,  however,  a  witness  on  the  stand  is  not  compelled  to  make 
any  calculations  except  those  of  a  simple  and  elementary  character." 

Services  before  Trial.  Before  the  trial,  the  expert  engineer  can  render 
valuable  assistance  in  defining  and  formulating  the  technical  issues  in- 
volved, in  indicating  the  documentary  evidence  and  the  physical  facts 
necessary  to  the  successful  conduct  of  the  case,  as  well  as  in  securing  the 
witnesses  to  establish  important  facts  or  scientific  principles.  This  will 
be  done  in  consultation  with  the  lawyer.  The  engineer  usually  has  ac- 
quired a  more  thorough  habit  of  investigation  than  is  common  with  lawyers. 
Most  lawyers  are  inexpert  in  matters  of  engineering  science,  and  the 
engineer's  services  may  be  of  great  value  in  the  preparation  of  a  case. 
He  should  anticipate  so  far  as  possible  the  expert  testimony  on  the  other 
side  and  prepare  to  meet  it.  The  lawyer  must  usually  be  advised  as  to 
what  questions  to  ask,  and  witnesses  should  know  the  scope  of  the  evidence 
they  are  expected  to  establish. 

The  advising  expert,  in  anticipating  cross-examination,  should  not 
allow  himself  or  others  to  go  on  the  witness  stand  if  the  probable  effect  of 
cross-examination  will  be  to  bring  out  facts  prejudicial  to  his  client  to  an 
extent  sufficient  to  more  than  offset  the  favorable  evidence  established 
by  the  direct  examination.  Sometimes  more  favorable  results  may  be 
extracted  by  the  cross-examination  of  an  honest  expert  on  the  opposing 
side  than  can  be  expected  from  one's  own  witness.  The  expert  engineer 
adviser  ordinarily  must  shape  the  questions  for  such  cross-examination. 

To  Know  Facts.  Engineers  or  surveyors  testifying  to  measurements 
should  know  them  to  be  correct,  and  should  read  the  tape  or  the  transit 
if  necessary  to  do  so,  and  also  test  the  tape  where  precise  measurements 
are  involved.  Measurements  read  from  drawings  may  be  attacked  as 
hearsay,  while  field  measurements  of  lands  or  actual  measurements  of 
structural  parts  will  be  competent  evidence. 

Compensation.  The  question  sometimes  arises  as  to  what  compensa- 
tion an  expert  witness  is  entitled  to,  and  involved  with  it  whether  one  may 
be  summoned  as  are  other  witnesses  when  expert  testimony  is  expected  of 
him.  It  has  been  held  in  some  jurisdictions  that  a  public  duty  exists  for 
everyone  to  contribute  his  share  in  securing  justice  for  others  and  the 
expert  must  do  his  duty  in  this  way  at  an  ordinary  witness'  pay.  This 


13—12        ENGINEER'S  RELATIONS  WITH  OTHERS 

rule  does  not  prevail  generally.  Under  it  a  witness  must  testify  to  facts 
in  his  knowledge,  even  to  scientific  facts  applicable  to  the  case.  He  cer- 
tainly cannot,  under  summons  as  an  ordinary  witness,  be  required  to  make 
an  investigation,  and  it  is  doubtful  if  he  can  be  asked  for  an  opinion.  If 
he  can  so  control  his  mind,  under  such  circumstances,  as  not  to  have 
formed  an  opinion  in  answer  to  a  question,  he  is  doubtless  within  his 
rights.  If  he  has  seen  or  directly  heard  anything  of  a  sort  to  which  any 
other  witness  must  testify,  he  is  in  the  position  of  an  ordinary  witness 
and  must  testify.  The  engineer  summoned  into  court  should  find  out 
the  law  as  to  compensation  in  the  State  in  which  the  court  is  held. 

Agreement  for  Expert  Services.  An  engineer  who  is  to  serve  as  an 
expert  witness  at  the  solicitation  of  one  party  to  a  suit  should  have  a 
definite  agreement  with  this  party  or  his  attorney  as  to  his  remuneration. 
Whether  the  agreement  is  written  or  oral  is  a  business  matter  in  which 
the  credit  and  good  faith  of  the  party  and  his  attorney  are  involved.  In 
some  cases  the  agreement  should  be  with  the  attorney  personally  and 
not  as  the  agent  of  his  client,  especially  if  the  latter  is  financially  incompe- 
tent. The  amount  of  remuneration  for  expert  witnesses  is  sometimes 
fixed  by  statute,  but  this  may  or  may  not  allow  a  private  agreement  to 
be  made  for  greater  compensation. 

Court  to  Appoint  Experts.  Opinion  evidence  is  in  disfavor,  as  has 
been  stated,  and  one  remedy  suggested  is  to  have  one  expert  appointed 
by  the  court  instead  of  one  or  more  by  either  party  to  the  suit.  In  a  trial 
in  court  the  law  applicable  is  best  determined  if  each  lawyer  digs  out  the 
points  of  the  Common  Law  or  of  Statute  Law  involved  which  support 
his  case,  while  the  judge  makes  the  final  ruling.  In  a  similar  way  each 
party  ought  to  have  a  scientific  expert  investigate  in  his  interest  the  natural 
laws  and  scientific  principles  involved,  the  final  judgment  being  in  this 
case  reached  in  the  tribunal  of  the  court,  at  present  the  jury. 

There  would  be  some  advantage  if  it  were  possible  to  have  the  applica- 
tion of  scientific  principles  or  laws  decided  by  a  just  and  competent  expert 
in  such  principles,  much  as  the  learned  judge  decides  questions  of  municipal 
law.  There  are  several  difficulties  in  the  way  of  attaining  the  millennium 
in  this  way.  The  many  judges  now  sitting  cannot  have  personal  knowledge 
adequate  to  insure  the  selection  of  competent  and  unbiased  experts  in 
various  lines  of  business.  It  furthermore  unduly  expands  the  powers  of 
the  judges,  some  of  whom  are  elected,  or  are  partisan  appointees ;  while 
there  may  be  an  appeal  from  a  decision  as  to  a  point  of  law,  there  can  be 
no  appeal  from  an  appointment  injudiciously  made. 

Jury  Decides  Facts.  Finally,  unless  our  system  of  procedure  in  law  is 
altogether  revolutionized,  the  jury  must  still  be  the  sole  judge  as  to  the 
facts,  and  would  not  and  could  not  be  bound  by  the  opinion  of  even  an 


ENGINEER'S  RELATIONS  WITH  OTHERS        13-13 

official  expert.  In  the  future,  as  in  the  past,  juries  will  commonly  be 
favorably  impressed  with  sound  evidence  based  on  scientific  principles 
and  clearly  presented,  and  will  attach  such  importance  as  they  please  to 
opinions  pure  and  simple. 

Valuation.  The  employment  of  engineers  in  the  valuation  of  public 
utilities  is  assuming  growing  importance,  and  is  in  some  sense  expert  work 
whether  it  brings  the  engineer  into  court,  before  commissions,  or  only 
before  boards  of  directors,  or  before  municipal  authorities.  Much  new 
literature  is  appearing  upon  this  rather  new  development,  and  financial 
and  physical  laws  and  principles  must  be  understood  as  well  as  the  bearing 
of  Statute  Law  and  Common  Law  upon  the  subject. 


PART  II 

CONTRACT  LETTING 

CHAPTER  XIII 
ADVERTISEMENT 

WHEN  an  Engineer  is  employed  upon  a  project  which  looks  towards 
a  Contract  for  construction,  the  first  step  ought  to  be  a  preliminary  investi- 
gation and  report  upon  the  project.  In  many  cases  such  an  investigation 
and  report  would  show  to  the  promoters  that  the  project  was  impracticable 
or  unwise  from  the  financial  standpoint  and  should  be  abandoned  without 
further  loss,  or  that  some  important  modification  should  be  adopted. 

Sometimes  the  projector  of  an  enterprise  does  not  ask  for  such  service 
but  is  disposed  to  push  ahead  without  any  preliminary  report.  In  many 
cases  it  is  the  professional  duty  of  the  Engineer  to  suggest  to  his  client 
the  necessity  that  a  preliminary  investigation  and  report  should  be  made. 
Capitalists  are  not  always  wise  enough  to  appreciate  the  necessity  for 
such  preliminary  work  unless  well  advised  by  others. 

Sometimes  the  preliminary  work  has  already  been  done  by  another 
Engineer.  For  his  own  protection  an  Engineer  called  in  under  such  cir- 
cumstances is  justified  in  lobking  into  the  proposition  far  enough  to  satisfy 
himself  that  it  is  wise  to  become  associated  with  it.  An  Engineer  should 
be  cautious  about  going  far  into  any  venture  that  has  not  had  a  proper 
preliminary  investigation  which  shows  it  to  be  justifiable. 

It  should  be  further  understood  that  an  Engineer  who  has  had  previous 
experience  in  enterprises  of  a  similar  character  will  often  be  better  qualified 
than  anyone  else  connected  with  the  project  to  determine  the  proper  pro- 
cedure in  carrying  the  work  through  its  various  steps  to  a  successful  con- 
clusion. 

The  steps  leading  to  a  Contract  for  construction  may  then  be  as  follows : 

1.  Make  preliminary  examination  and  report  as  to  feasibility,  or  as 
to  the  methods  in  which  the  work  may  be  carried  out. 

1S-1 


13-2  ADVERTISEMENT 

2.  Prepare  preliminary  plans  and  estimates. 

3.  Secure  proper   authority  for  the  letting  and  construction  of   the 
work. 

4.  Determine  the  steps  legally  necessary  in  letting  the  Contract. 

5.  Prepare   construction   plans   upon  which  to  draft  Contract  and 
Specifications. 

6.  Secure  any  lands  or  right  of  way  necessary. 

7.  Prepare  forms  for :  (a)  Advertisement,  (b)  Information  for  Bidders, 
(c)  Proposal,  (d)  Contract,  (e)  Bond,  (/)  Specifications. 

8.  Advertise. 

9.  Receive  Proposals. 

10.  Open  Proposals  and  award  Contract. 

11.  Have  Contract  signed  and  Bond  furnished. 

This  chapter  and  those  which  follow  are  devoted  mainly  to  the  prepara- 
tion of  the  papers  and  forms  necessary  or  desirable  in  Contract  letting,  but 
each  of  the  steps  mentioned  above  requires  more  extended  consideration. 

1.  The  preliminary  examination  and  report  may  sometimes  consist 
of  a  very  general  consideration  of  the  project ;    in  many  cases  it  will  in- 
volve the  second  step. 

2.  The  preliminary  plans  and  estimates  will  often  be  necessary  to  the 
preliminary  report.     If  not,  it  will  seldom  be  wise  to  go  ahead  without 
them,  for  a  reasonably  correct  knowledge  of  the  cost,  and  of  the  general 
details  of  the  scheme  to  be  followed,  should  be  promptly  acquired.     In 
many  cases  sub-surface  investigations  should  constitute  a  part  of  the  pre- 
liminary work. 

3.  By  the  time  this  has  been  done  and  sometimes  even  before  making 
the  preliminary  plans  and  estimates,  the  Engineer  in  charge  should  satisfy 
himself  as  to  the  fact  that  he  is  acting  under  proper  authority.     If  em- 
ployed by  an  individual,  he  should  ask  for,  and  receive  a  letter  of  instruc- 
tion as  to  what  is  wanted  of  him  and  what  duties  and  responsibilities  he  is 
to  assume.     If  employed  by  a  private  corporation  or  a  municipal  corpora- 
tion as  Engineer  in  charge  of  the  project,  he  should  know  that  the  cor- 
poration, through  definite  action  on  the  part  of  the  proper  officers  or  by  the 
direct  act  of  the  corporation  itself,  as  the  case  may  be,  has  given  lawful 
authority  for  the  prosecutiojn  of  the  work.     An  Assistant  Engineer  may  be 
under  the  orders  of  a  higher  official  and  then  not  be  charged  with  respon- 
sibility in  this  matter.     Nevertheless,  in  some  cases  it  may  be  wise  for  him 
not  to  accept  employment  if  he  has  satisfied  himself  that  the  project  is 
likely  to  encounter  serious  difficulties  because  necessary  legal  formalities 
have  not  been  observed. 

Sometimes  the  charter  of  a  municipality  gives  the  Commissioner  of 
Public  Wofrks  (or  some  other  Engineer  in  high  office)  power  to  directly 


ADVERTISEMENT  13-3 

authorize  construction  work;  sometimes  a  vote  of  a  City  Council  is 
required  together  with  the  Mayor's  approval.  In  a  New  England 
town,  it  is  necessary  to  have  a  vote  in  town  meeting  authorizing  the 
work  and  appropriating  money  for  it.  In  this  case  a  "  warrant  "  (or 
notice  of  intention  to  act  in  the  matter)  must  have  been  posted  or  ad- 
vertised in  the  call  for  the  town  meeting ;  without  this  a  vote  is  not  legal  or 
effective. 

In  the  case  of  some  private  or  quasi-public  corporations,  specific 
authority  may  be  necessary,  sometimes  from  the  stockholders,  often 
from  the  Board  of  Directors.  Possibly  one  or  more  of  the  higher  officers 
may  have  legal  power  to  authorize  the  work  and  appropriate  money 
for  it.  The  powers  of  a  corporation,  or  its  officers,  municipal  or  other- 
wise, are  determined  by  its  charter;  the  corporation  may,  perhaps,  by 
general  action  have  delegated  many  of  its  powers  to  its  officers,  but  in 
some  cases  powers  can  be  delegated  only  by  special  vote  for  a  specific  pur- 
pose. Considerable  care  needs  to  be  exercised  by  somebody  to  be  sure 
that  adequate  authority  has  been  given. 

4.  The  steps  legally  necessary  in  letting  a  Contract  are  important  in 
United  States  government  work,  in  State  work,  and  in  municipal  work. 
With  work  for  individuals  and  for  private  or  quasi-public  corporations, 
there  are  seldom  any  restrictions,  and  where  there  is  no  probability  of 
abuse  of  power  or  the  exercise  of  favoritism,  there  is  often  an  advantage 
in  having  a  free  hand.  In  the  case  of  very  large  cities,  the  tendency  to 
show  favor  to  political  friends  has  so  often  existed,  that  a  provision  re- 
quiring advertising  seems  wise  and  substantially  necessary. 

All  of  the  legislation  of  a  city  is  undertaken  under  a  charter  or  franchise 
bestowed  by  the  State.  Contracts  by  a  municipal  corporation,  a  county,  or 
a  State  must  be  within  the  act  creating  them,  and  within  the  privileges 
and  powers  of  their  charter,  constitution,  or  organization. 

If  a  charter  requirement  exists  to  the  effect  that  Specifications  shall  be 
prepared  and  published  and  the  work  advertised  and  Contract  awarded  to 
the  lowest  bidder,  it  is  imperative  that  the  prescribed  course  be  followed. 
Bids  even  for  public  work  need  not  be  invited  unless  it  is  expressly  re- 
quired by  statute,  charter,  or  ordinance. 

The  statutes  of  the  United  States  are  stringent  in  their  provisions  re- 
quiring advertising  before  letting  United  States  government  work  and  also 
for  securing  supplies  and  services  other  than  personal  services.  In  very 
many  cities  there  is  a  provision,  sometimes  in  the  city  ordinances,  sometimes 
in  the  charter  from  the  State  (the  incorporating  act),  that  work  of  any  con- 
siderable amount  shall  be  advertised ;  and  the  Engineer  in  charge  of  work 
to  be  contracted  for  should  understand  the  legal  requirements  in  this  direc- 
tion. In  Massachusetts  there  was  formerly  a  special  requirement  of  a 


13-4  ADVERTISEMENT 

peculiar  nature  which  has,  however,  been  amended.  It  was  provided 
that  in  the  letting  of  any  Contract  for  State  work  the  following  provision 
must  be  included : 

A.  The  Contractor  shall  not  request  or  require  any  laborer,  workman  or 
mechanic  in  his  employ,  or  that  of  any  sub-contractor  or  other  person  doing  or 
contracting  to  do  the  whole  or  a  part  of  the  work  to  be  done  hi  this  Commonwealth, 
to  work  more  than  eight  hours  in  any  one  calendar  day,  and  shall  give  preference  in 
employment  first,  to  citizens  of  Massachusetts,  second,  to  other  citizens  of  the 
United  States,  and  shall  allow  all  employees  on  said  work  to  lodge,  board  and  trade 
where  they  choose. 

The  peculiarity  in  this  requirement  was  that  any  State  employee  who 
failed  to  include  this  in  a  Contract  for  State  work  thereby  committed  a 
misdemeanor  and  was  subject  to  penalty.  This  was  therefore  a  provision 
as  to  "  letting  "  the  Contract,  as  distinct  from  the  carrying  out  of  the 
Contract.  Members  of  a  State  commission  were  at  one  time  indicted  on 
the  ground  that  the  printer  who  printed  some  blank  forms  for  them  did  not 
have  this  provision  stated  when  he  was  given  the  printing  to  do.  The 
prosecution  in  this  case  was  later  abandoned ;  but  under  circumstances  only 
slightly  different,  the  officials  might  have  been  found  to  have  transgressed 
this  law.  The  enforcement  of  the  provision  thus  put  into  the  Contract  is 
now  required  with  a  penalty  for  non-compliance,  either  by  a  State  employee 
or  the  Contractor,  and  similar  provisions  exist  in  other  States.  The 
statute  in  such  a  case  should  be  carefully  examined  to  determine  what,  if 
any,  requirements  there  are  with  relation  to  letting  Contracts. 

The  statute  or  ordinance  covering  the  matter  sometimes  provides  that 
the  work  shall  be  let  to  the  lowest  bidder ;  oftentimes  it  does  not.  The 
Engineer  should  know,  before  advertising  or  before  preparing  the  various 
forms  necessary,  what  are  all  of  the  legal  requirements  connected  with 
the  letting  of  the  work,  and  for  this  he  must  be  guided  by  the  statute  or 
the  ordinance.  There  may  be  other  requirements  as  to  carrying  out  the 
Contract  not  pertinent  in  this  paragraph,  which  deals  with  the  letting. 

5.  The  construction  plans  should  be  sufficiently  complete  so  that 
adequate  Specifications,  together  with  the  Contract,  may  be  prepared  from 
them.  Although  some  detail  plails  will  necessarily  be  prepared  during 
the  progress  of  the  work,  the  plans  should  also  be  sufficiently  complete 
to  allow  the  Contractor  to  make  an  intelligent  bid,  including  here,  also, 
the  results  of  sub-surface  investigations  in  many  cases.  Oftentimes  bids 
on  unit  prices  allow  complete  liberty  in  the  preparation  of  the  detail  plans. 
In  architectural  work,  particularly,  where  lump  sum  bids  are  usual,  it  is 
nevertheless  common  practice  for  detail  plans  to  follow  rather  than  pre- 
cede the  letting  of  the  Contract,  and  the  bid  is  made  with  knowledge  of  the 
contingencies  involved.  With  the  Engineer  there  is  opportunity  for  the 


ADVERTISEMENT  13-5 

exercise  of  good  judgment  as  to  how  far  the  plans  shall  be  complete  before 
bids  are  made.  It  is  necessary  that  plans  and  Specifications  be  sufficiently 
complete  to  present  a  common  basis  for  all  bids. 

6.  Lands  necessary  should  be  secured  before  letting  the  Contract. 
It  is  unwise  to  risk  difficulty  with  the  Contractor  due  to  failure  to  provide 
the  lands  required.     Frequently  this  transaction  must  wait  until  the 
Contract  plans  are  ready ;  not  infrequently  it  may  be  wise  and  quite  possible 
to  secure  all  lands  necessary  as  soon  as  the  preliminary  plans  are  ready, 
or  to  take  an  option  on  them  by  bond  or  other  adequate  means. 

7.  The  preparation  of  the  various  forms  required  is  of  great  importance, 
and  this  chapter  and  those  following  are  devoted  to  a  discussion  of  these 
forms. 

8.  The  subject  of  advertising  is  next  in  order,  and  this  chapter  deals 
specially  with  the  Advertisement.     At  the  outset,  the  question  arises: 
"  Why  advertise?  "     It  may  be  to  comply  with  the  law,  to  secure  the  ad- 
vantages of  competition,  or  frequently  both.     The  character  of  the  Ad- 
vertisement may  well  depend  upon  its  purpose.     If  purely  to  meet  the 
requirements  of  law,  a  perfunctory   performance  is  enough,  such  as  is 
shown  in  the  following : 

B.  U.  S.  ENGINEER  OFFICE,  NEW  LONDON, 

Conn.,  July  27,  1905.  Sealed  proposals  in  tripli- 
cate for  dredging  in  West  River  from  New  Ha- 
ven Harbor,  Conn.,  will  be  received  here  until 
12  o'clock  noon,  Aug.  26,  1905,  and  then  publicly 
opened.  Information  furnished  on  application. 
C.  F.  POWELL,  Lt.  Col.,  Engrs. 

In  this  particular  case  the  Engineer  probably  knows  every  one  of  the 
small  number  of  dredging  companies  or  firms  available.  A  letter  to  each 
of  them  serves  well  the  purpose  of  competition ;  the  Advertisement  com- 
plies with  the  law.  Some  other  Advertisements  for  United  States  work 
contain  far  less  than  seems  desirable  to  secure  suitable  competition. 

Where  Advertisement  is  required  by  law,  the  exact  terms  of  the  statute 
or  ordinance  must  be  scrupulously  followed.  The  requirements  of  a 
statute  prescribing  the  mode  and  time  of  advertising  for  bids  are  manda- 
tory ;  something  "  equally  good  "  is  of  no  value  for  compliance  with  the 
law.  Advertisement  in  five  different  issues  of  a  paper,  for  instance,  has 
been  held  by  the  courts  not  to  be  equivalent  to  Advertisement  for  five 
consecutive  days  where  the  latter  was  required,  and  a  Contract  let  under 
it  was  held  illegal.  A  paper  "  published  "  in  a  certain  city  is  not  the 
same  as  a  paper  "  printed  "  in  that  city.  A  Contract  which  required  the 
mayor's  approval  to  allow  it  to  be  let  without  Advertisement  is  not  ren- 
dered valid  by  the  mayor's  signature  ratifying  the  Contract  after  it  is  made. 
Complete  and  specific  compliance  with  the  law  is  imperative. 


13-6  ADVERTISEMENT 

In  some  instances  where  competitive  Proposals  do  not  produce  any 
advantage,  the  courts  have  decided  that  advertising  is  not  essential,  and 
there  are  a  number  of  cases  where  this  proposition  applies.  This  is  true 
in  cases  of  emergency,  or  with  Contracts  of  practical  monopoly,  where 
scientific  skill  is  required,  and  where  materials  must  be  selected  upon  tests. 
An  important  case  is  that  of  "  patented  inventions,"  and  the  courts  in  some 
States  have  held  the  municipality  may  contract  without  advertising  for 
patented  or  monopolized  articles,  or  may  specify  such  articles.  In  some 
States,  however,  the  courts  have  held  otherwise,  so  that  it  is  necessary  to 
know  what  the  law  is  in  any  particular  State  where  the  Contract  is  to  be 
let.  In  some  States,  the  city  may  contract  without  advertising  for  the 
direct  use  of  the  city  itself,  but  not  in  cases  where  property  of  citizens  is 
to  be  assessed  to  pay  for  the  improvement. 

Plans  and  Specifications  in  sufficient  detail  must  be  provided  previous 
to  Advertisement.  This  is  necessary  to  secure  bids  upon  the  same  thing, 
and  it  is  necessary  that  the  bids  should  be  unqualifiedly  for  the  same 
thing ;  otherwise  there  is  not  competition. 

An  act  which  requires  a  Contract  to  be  given  to  the  lowest  responsible 
bidder  is  not  observed  if  the  Contract  is  awarded  on  plans  and  Specifications 
prepared  by  different  parties ;  there  must  be  a  common  standard.  It  is 
further  obligatory  upon  the  officers  of  a  city  or  State  to  execute  the  Contract 
in  accordance  with  the  terms  and  Specifications  by  which  the  bids  were 
made.  Otherwise,  the  Contract  work,  strictly  considered,  is  illegal,  as  no 
competition  was  had  for  the  work  as  executed.  The  courts  recognize  this 
principle,  and  have  held  the  work  illegal  in  some  cases  where  the  changes 
were  material.  Minor  changes  can  hardly  be  avoided.  It  is  seldom  that 
any  one  takes  the  trouble  to  pursue  any  such  illegal  action ;  it  is  difficult 
to  fix  the  blame  upon  any  official  financially  responsible,  and  it  is  not 
easy  to  connect  the  Contractor  with  the  irregularity.  A  suit  to  enjoin 
payment  to  the  Contractor  for  work  so  done  would  be  successful,  probably, 
only  in  cases  where  the  change  in  requirements  was  very  substantial.  It  is 
difficult  to  prevent  or  punish  graft  in  the  government  of  some  of  our  large 
cities. 

Where  the  law  requires  letting  to  the  lowest  bidder,  letting  to  any  other 
bidder  is  illegal.  Nevertheless  it  is  legal  not  to  award  the  Contract  to 
anyone  and  to  re-let.  It  is  wise  in  case  of  re-letting,  that  the  Contract  or 
the  estimated  amounts  should  be  sufficiently  changed,  if  possible,  so  that 
the  bids  the  second  time  are  not  completely  upon  the  same  work  as  they 
were  the  first  time.  Under  such  circumstances,  it  cannot  be  contended 
that  the  lowest  bid  was  that  made  on  the  first  letting,  because  that  bid  was 
not  made  on  the  final  Contract  upon  which  the  second  bids  were  presented 
and  the  final  award  made.  Where  the  term  "lowest  responsible  bidder" 


ADVERTISEMENT  13-7 

is  used,  in  the  absence  of  fraud  it  is  held  that  the  discretion  of  the  Com- 
mission or  Board  is  conclusive. 

The  law  regards  provisions  touching  competition  to  be  for  the  pro- 
tection of  the  public  and  not  of  the  bidder.  As  a  result,  any  citizen  may 
raise  a  question  which  a  bidder,  not  a  citizen,  cannot  be  entitled  to  raise. 
An  unsuccessful  bidder,  if  a  citizen,  may  thus  bring  suit,  or  if  not  a  citizen, 
he  may  succeed  in  inducing  some  friend,  a  citizen,  to  bring  suit. 

In  case  the  law  is  not  complied  with,  several  results  follow.  If  a  sewer 
assessment,  or  a  betterment  tax  is  assessed  against  an  abutting  estate,  the 
owner  may  legally  and  successfully  refuse  to  pay.  If  a  citizen  brings  a  suit 
to  enjoin  the  city  from  paying  the  Contractor,  the  courts  will  enjoin  the  city ; 
the  Contractor  will  not  be  paid ;  the  Contract  is  not  a  legal  Contract.  The 
Contractor  cannot  sue  for  work  done  and  materials  furnished,  for  the  basis 
for  this  would  be  an  implied  Contract,  and  the  real  trouble  is  that  even  an 
express,  written  Contract  is  illegal  because  not  advertised.  The  law  as  to  ad- 
vertising was  passed  to  protect  the  tax  payer  who  cannot  otherwise  protect 
himself,  to  prevent  favoritism  in  letting  by  prescribing  advertising  in  order 
to  secure  competition.  It  is  the  duty  of  the  Contractor  to  know  that  the 
Contract  is  legally  entered  into.  He  has  opportunity  to  protect  himself  and 
the  law  puts  the  burden  on  him  to  do  it.  Any  other  view  of  the  law  would 
allow  to  be  done  the  very  thing  the  statute  was  passed  to  prevent  being  done. 

To  secure  competition,  a  good  understanding  of  advertising  is  of  value. 
A  considerable  part  of  all  advertising  done  in  any  business  is  ineffective. 
While  advertising  is  somewhat  expensive,  an  additional  bid  lower  than 
would  otherwise  be  secured  will  fully  justify  the  cost  of  much  advertising ; 
undue  length  of  Advertisement,  however,  diverts  rather  than  attracts 
attention.  The  Advertisement  should  stand  for  a  length  of  time  sufficient 
to  give  ample  opportunity  for  Contractors  to  see  it  and  to  have  time  to 
prepare  careful  bids.  Often  the  statute  specifies  the  length  of  time  and  the 
publications  to  be  used.  For  important  work  more  time  than  legally 
required  may  sometimes  be  wisely  taken,  and  the  Advertisements  may  be 
published  in  prominent  engineering  journals,  whether  this  be  required  or 
not.  The  Engineering  News  and  the  Engineering  Record  (now  combined 
in  the  Engineering  News-Record)  have  long  made  a  specialty  of  such 
advertisements,  which  come  from  all  parts  of  the  United  States. 

The  Advertisement  should  be  in  form  to  attract  attention,  and  con- 
tain information  sufficient  to  attract  desirable  bidders ;  to  show  any  bidder 
whether  the  work  is  in  his  field  of  work,  within  his  financial  resources,  and 
whether  it  can  be  done  at  a  time  when  his  force  and  equipment  are  avail- 
able. Such  information  may  prevent  incapable  bidders  from  competing. 
To  attract  attention,  it  should  have  in  suitable  type  a  heading  such  as 
Water  Works,  Sewers,  Highway  Bridge,  like  the  following  sample : 


13-8  ADVERTISEMENT 

C.  EARTH   DAM. 

BOARD   OF  WATER   COMMISSIONERS. 

43  Bridge  Street,  Springfield,  Mass. 
Sealed  proposals  will  be  received  by,  etc. 

To  meet  other  requirements,  it  should  in  general  state  clearly  the 
general  character  of  the  work  to  be  done ;  for  whom  it  is  to  be  done ;  where 
it  is  to  be  done ;  the  amount  or  approximate  quantities  in  sufficient  detail, 
frequently  by  items ;  the  date  for  beginning  and  ending  the  work ;  where 
plans  can  be  seen  or  obtained  and  where  forms  for  Proposals,  Specifications 
and  Contract  can  be  obtained ;  the  person  and  place  to  which  bids  are  to 
be  sent ;  the  date  and  hour  for  closing  of  bids ;  the  place,  date  and  hour  for 
opening  bids ;  the  amount  of  the  security  to  accompany  bid  and  whether 
Bond,  certified  check,  or  cash,  and  to  whom  payable ;  the  required  amount 
of  the  Contract  Bond ;  whether  the  right  is  reserved  to  reject  any  or  all  bids, 
or  whether  the  bid  of  the  lowest  responsible  bidder  will  be  accepted.  The 
name  of  the  Engineer  should  appear.  The  Contractor  is  entitled  to  know 
this.  With  some  Engineers  he  may  be  unwilling  to  bid  at  all.  A  further 
very  desirable  provision  is  that  bids  must  be  made  on  the  printed  forms 
furnished,  the  reason  for  which  will  appear  later.  In  special  cases,  there 
will  be  reason  for  adding  some  special  information  to  meet  special  condi- 
tions. 

Many  matters  of  considerable  importance  may  properly  and  much 
better  be  left  for  the  next  form,  Information  for  Bidders,  or,  perhaps,  for 
the  Proposal.  An  Advertisement  which  is  too  long  is  less  effective  as  well 
as  more  expensive.  Whether  long  or  short,  all  legal  requirements  must 
be  complied  with.  Below  is  a  sample  form  for  an  Advertisement  which 
contains  most  or  all  of  the  necessary  requirements. 

D.  Bids  opened  March  10. 

SEWERS 

FRANKTOWN,  MASS. 

Sealed  proposals  or  bids  for  the  construction  of  a  sewer  will  be  received  by  the 
Board  of  Sewer  Commissioners  of  the  City  of  Franktown,  Mass.,  at  their  office  in 
the  City  Hall,  until  two  o'clock  P.M.,  Thursday,  March  10,  1917,  at  which  place  and 
time  the  bids  will  be  publicly  opened  and  read  aloud. 

The  following  is  an  approximate  statement  of  the  work  to  be  done. 
1971  lineal  feet  of  7'6"  sewer 
2417  lineal  feet  of  7'9"  sewer 
1557  lineal  feet  of  8'0"  sewer 
440  lineal  feet  of  8'6"  sewer 

all  to  be  of  circular  form  and  built  of  reinforced  concrete ;  together  with  manholes, 
connections,  etc. 


ADVERTISEMENT  13-9 

Information  for  Bidders,  form  of  Proposal,  Specifications,  Contract,  and  Bond 
are  contained  in  a  pamphlet  which  may  be  obtained  from  Richard  Roe,  City  En- 
gineer of  Franktown,  Mass.,  at  his  office  in  the  City  Hall.  All  bids  must  be  made 
upon  the  regular  forms  furnished.  Plans  can  be  seen  at  the  office  of  the  City 
Engineer. 

Work  is  to  be  begun  within  ten  days  after  the  signing  of  the  Contract,  and  must 
be  complete  by  November  1,  1917. 

A  properly  certified  check  for  $4500  without  conditions,  drawn  upon  some 
bank  in  Boston  or  New  York,  and  payable  to  the  order  of  the  Board  of  Sewer  Com- 
missioners of  Franktown,  will  be  required  with  each  bid ;  checks  of  unsuccessful 
bidders  will  be  promptly  returned;  a  satisfactory  surety  company's  Bond  for 
$35,000  will  be  required  with  the  Contract.  , 

The  Board  reserves  the  right  to  reject  any  or  all  bids  or  to  accept  any  bid  it 
may  deem  to  be  for  the  best  interests  of  the  City. 

JOHN  DOE, 
HIRAM  WEEKS, 
ARTHUR  SMITH. 

Board  of  Sewer  Commissioners. 
RICHARD  ROE,  City  Engineer, 
Feb.  4,  1917. 

This  simple  Advertisement  contains  nearly  or  quite  everything  that 
is  necessary  for  ordinary  Contracts.  Although  there  may  be  several  other 
provisions  that  are  desirable  or  necessary  in  special  cases,  it  should  be  un- 
derstood that  many  matters  that  find  their  way  in  Advertisements,  as  they 
occur  in  present  practice,  may  well  be  saved  foi*  the  Information  for 
Bidders,  which  will  be  contained  in  the  pamphlet  which  ordinarily  contains 
the  Proposal  and  the  Contract  form  also.  As  has  been  stated,  it  is  desir- 
able to  keep  the  Advertisement  short  because  it  is  in  that  form  more  effec- 
tive and  also  because  publication  of  the  Advertisement  costs  more  than  the 
simple  printing  under  the  item  of  Information  for  Bidders  in  the  pamphlet. 

As  a  sample  of  additional  provisions,  to  be  added  in  special  cases  are 
the  following  two  which  will  explain  themselves : 

E.  The  site  of  the  work  is  on  the  town  line  between  Granville  and  Blandford, 
Mass.,  about  twelve  miles  west  of  Westfield,  Mass.    The  work  includes  the  con- 
struction of  an  earth  dam  containing  135,000  cubic  yards  rolled  embankment,  three 
miles  of  roads,  gate  house,  spillway,  etc.     It  is  desirable  that  prospective  bidders 
visit  the  site  of  the  work  as  early  as  possible  on  account  of  the  distance  of  the  work 
from  the  railroad  and  the  uncertainty  of  the  weather  at  this  season  of  the  year. 

From  another  Advertisement : 

F.  Plans  and  specifications  may  be  seen  at  the  Village  Clerk's  office.     The 
Engineer  will  be  in  Lake  Placid  after  July  29  for  the  purpose  of  going  over  the  ground 
and  furnishing  any  information  required." 

Each  of  these  contains  information  which  ought  not  to  be  left  for  the 
Instructions  to  Bidders. 


13-10  ADVERTISEMENT 

Sometimes  there  are  peculiar  provisions  with  relation  to  payment  which 
might  attract  or  repel  a  Contractor,  of  which  the  following  two  are  examples : 

G.  Said  Garland  County,  Arkansas,  agrees  to  pay  to  the  successful  bidder,  or 
contractor,  the  sum  of  ten  thousand  ($10,000)  dollars  per  year  until  said  building 
is  fully  paid  for. 

H.  The  work  will  be  paid  for  in  special  tax  bills  issued  against  the  lots  and 
parcels  of  ground  liable  therefor. 

It  is  appropriate  that  these  should  appear  in  the  Advertisement. 

In  rare  cases  a  very  brief  Advertisement  which  will  catch  the  eye  is 
entirely  sufficient ;  the  following  appears  to  be  a  case  of  that  sort : 

7.  Harbor  Work,  Valparaiso,  Chile. 

Works  amount  £2,500,000  ($12,500,000). 

On  the  2d  of  April,  1906,  bids  will  be  open 
in  Santiago  (Chile)  for  the  construction  of 
docks  and  improvement  of  the  harbor  of  Val- 
paraiso. 

See  plans  and  specifications  in  Washington, 
D.  C.,  Chilean  Legation,  1228  17th  Street;  in 
New  York,  Consulate  General,  135  W.  llth 
Street. 

Here  the  work  is  so  important  that  any  Contractor  interested  would 
expect  to  look  into  the  matter  quite  fully,  and  this  brief  note  is  sufficient 
to  attract  his  attention. 

Bids  for  ordinary  work  are  sometimes  made  very  brief,  and  where  the 
work  is  likely  to  be  done  by  a  local  Contract  or  they  may  be  sufficient.  The 
following  is  an  example  of  such  an  Advertisement : 

J.  Sewer  Construction 

Bids  will  be  received  by  the  Board  of  Public 
Service  until  12  o'clock  noon,  Central  Time, 
Monday,  August  21,  1905,  for  the  construction 
of  5380  lineal  feet  of  36  inch  sewer  with  22  man- 
holes and  38  catch  basins. 

Bids  may  be  for  either  brick  or  pipe  con- 
struction or  for  both.  Approximate  depth  11 
feet. 

While  this  may  serve  the  purpose,  in  general  it  is  better  to  spend  a  small 
amount  o'f  money  to  give  somewhat  more  informatio'n. 

Referring  to  the  sample  Advertisement,  D;  in  the  upper  left  hand 
corner  occurs  the  statement  "  Bids  opened  March  10,"  which  is  likely  to 
quickly  catch  the  eye  of  a  Contractor  and  interest  him  if  his  plant  will  be 
available  at  that  date. 

9.  The  next  item  of  importance  states  that  "  sealed  Proposals  "  "  will 
be  received."  A  later  chapter  deals  specially  with  the  Proposal.  It  is 
provided  elsewhere  in  the  Advertisement  that  "  all  bids  must  be  upon  the 


ADVERTISEMENT  13-11 

regular  forms  furnished."  The  phraseology  takes  different  forms  in 
different  Advertisements  examined,  and  the  following  are  samples  of  alter- 
nate phraseology  taken  from  actual  Advertisements : 

K.    Bidders  must  use  the  printed  forms,  as  none  other  will  be  received. 

L.  The  City  Engineer  will  furnish  bidders  with  a  blank  form  of  proposal. 
No  proposal  will  be  considered  unless  submitted  on  such  form. 

M.  All  proposals  must  be  made  on  the  regular  forms  furnished  by  the  State 
Geological  Survey  Commission,  to  be  obtained  through  the  office  of  the  Highway 
Commission.  Bids  otherwise  made  out  will  not  be  received. 

The  particular  value  of  this  provision  is  that  the  printed  form  of 
Proposal  should  further  state  that  the  bidder,  if  the  Contract  is  awarded  to 
him,  agrees  to  "  sign  a  Contract  in  the  form  on  file  with  the  City  Engineer" 
or  o'ther  official  specified,  leaving  no  opportunity  for  a  claim  by  the  bidder 
that  he  had  always  been  ready  to  sign  a  Contract,  but  not  in  the  form 
which  he  is  asked  to  sign. 

10.  Another  item  refers  to  opening  the  bids,  and  the  award  of  the  Con- 
tract.    The  statement  in  the  Advertisement  is  that  the  bids  will  be  "  pub- 
licly opened  and  read  aloud."     The  word  "  aloud  "  does  not  appear  in  most 
Contracts,  but  it  would  seem  that  a  Contractor  thinking  of  bidding  on  the 
work  would  be  favorably  impressed  with  the  fact  that  a  distinct  state- 
ment is  made  that  he  will  have  opportunity  to  hear  the  reading  of  the 
bids;   his  instinctive  feeling  is   likely  to   be  that   everything  is  to   be 
straight  and  above-board  in  the  work,  and  that  impression  on  his  mind 
ought  to  have  some  commercial  value  to  the  municipality  or  party  letting 
the  work. 

11.  The  signing  of  the  formal  Contract  and  furnishing  the  Bond  follow. 
It  has  already  been  stated  that  the  use  of  "  the  regular  forms  furnished  " 
requires  the  signing  of  the  Contract  in  the  form  required,  and  also  the  fur- 
nishing of  a  satisfactory  Bond.     The  function  of  the  certified  check  or  a 
preliminary  Bond  is  to  insure  such  action  by  the  bidder. 

The  provision  for  a  certified  check  needs  some  extended  comment. 
First,  as  to  the  amount  of  the  check,  the  proper  statement  is  that  the 
amount  should  be  sufficient  to  cover  the  probable  difference  between  the 
lowest  bid  and  that  next  above  it,  together  with  a  sufficient  allowance  to 
cover  any  delay  liable  to  occur  if  it  should  become  necessary  to  re-let  the 
work,  and  in  addition  to  this  the  cost  of  advertising  and  other  items  con- 
nected with  the  re-letting.  Just  what  this  amount  should  be  can  best  be 
determined  by  the  good  judgment  of  any  Engineer  who  is  frequently  letting 
work  of  a  similar  character. 

The  provision  is  made  in  some  cases  that  a  certified  check  shall  be  for 


13-12  ADVERTISEMENT 

some  specified  per  cent  of  the  bid.  This  has  been  in  actual  cases,  some- 
times 2  per  cent,  sometimes  5  per  cent,  and  sometimes  10  per  cent.  A 
provision  in  this  form  has  been  criticized  because  the  filing  of  such  a  check 
with  the  City  Clerk  or  some  other  official  leaves  an  opportunity  for  un- 
scrupulous people  to  get  together  and  determine  the  amount  of  any  bid 
from  the  check  deposited.  Sometimes  a  check  for  "  not  less  "  than  5  per 
cent  is  asked  for.  There  appears  to  be  no  reason  why  a  fixed  sum  should 
not  be  required,  based  upon  the  proper  percentage  of  the  Engineer's  esti- 
mate of  the  cost  of  the  work.  The  amount  of  the  check  will  then  be  equal 
and  fair  to  all  the  bidders. 

While  many  matters  of  detail  will  best  be  left  for  Information  for 
Bidders,  the  Advertisement  should  give  sufficient  information  so  that  a 
bidder  coming  from  a  distance  may  secure  his  certified  check  before  leaving 
home,  making  it  possible  for  him  to  prepare  his  bid  at  the  site  of  the  work 
and  file  it  at  the  specified  place,  and  also  await  the  opening  of  the  bids,  one 
trip  only  being  necessary. 

Instead  of  a  certified  check,  provision  is  sometimes  made  for  a  surety 
company's  Bond,  for  a  draft  on  New  York,  for  a  cashier's  check,  or  for 
cash,  and  the  reading  of  the  following  extracts  from  actual  Advertisements 
will  give  some  idea  of  what  people  have  done  in  this  matter : 

N.  No  bid  will  be  received  and  deposited  unless  accompanied  by  a  properly 
certified  check  for  the  sum  of 

0.  No  bid  will  be  received  unless  accompanied  by  a  Bidder's  Bond  as  herein- 
after set  forth  on  page ,  or  by  a  certified  check  upon  a  State  or  National 

Bank  or  a  Trust  Company  established  in  the  City  of  Louisville  (or  the  City  of  New 
York)  for  an  amount  not  less  than  seven  (7)  per  cent  of  the  total  amount  of  the 
accompanying  bid,  payable  to  the  Commissioners  of  Sewerage,  such  check  to  be 
returned  unless  forfeited  under  the  conditions  herein  stipulated. 

P.  No  bid  will  be  received  unless  it  is  made  on  the  blank  form  furnished  from 
this  office  and  is  accompanied  either  by  gold  coin  or  by  a  check  equal  to  five  per 
cent  of  the  amount  of  the  proposal,  certified  by  a  solvent  bank  in  the  State  of  Cali- 
fornia, payable  to  the  order  of  the  Secretary  of  the  Board  of  State  Harbor  Com- 
missioners. 

Q.  A  bond  with  sufficient  sureties  or  a  certified  check  made  payable  to  the 
City  Treasurer  for  the  sum  of  $200  must  accompany  each  bid  or  the  same  will 
not  be  considered. 

R.  All  bids  must  be  accompanied  by  a  City  Clerk's  or  Treasurer's  receipt 
showing  the  deposit  of  $100  in  cash  guaranteeing  the  execution  of  the  contract 
after  award  of  same. 

S.  Each  proposal  shall  contain  a  certified  check  or  a  New  York  or  Boston 
draft  in  the  amount  of  $5,000  (five  thousand  dollars)  payable  to  the  order  of  John 


ADVERTISEMENT  13-13 

J.  Turner,  Treasurer  of  Water  Commissioners,  Amsterdam,  N.  Y.,  as  a  guarantee 
that  the  bidder  will  enter  into  contract  in  case  of  award  to  him,  or  in  case  of  his 
failure  so  to  do,  then  said  amount  shall  be  absolutely  forfeited  to  said  Water  Com- 
missioners. 

T.  A  certified  check  on  a  New  Orleans  bank,  in  the  sum  of  $10,000,  deposited 
in  accordance  with  the  terms  of  the  specifications,  will  be  required  of  each  bidder. 

U.  Each  bid  shall  be  accompanied  with  a  bond  in  the  sum  of  $10,000  and  signed 
by  two  sureties,  for  the  acceptance  of  the  contract,  if  awarded  by  the  Board  of 
Trustees,  or  the  bidder  may  deposit  with  the  Board  of  Trustees,  in  lieu  of  such 
bond,  a  certified  check  or  bank  certificate  of  deposit,  payable  to  the  order  of  the 
Board  of  Trustees,  or  cash  equal  in  amount  to  the  bond  as  above  required. 

V.    The  checks  of  unsuccessful  bidders  will  be  returned  at  once. 

W.  The  check  of  the  successful  bidder  will  be  returned  as  soon  as  he  has  exe- 
cuted the  proper  bond  and  it  has  been  accepted. 

X.  No  check  or  draft,  thus  presented  to  the  Board  of  Water  Commissioners, 
shall  be  returned  to  the  bidders  until  after  the  award  and  signing  of  the  contract 
and  the  furnishing  of  satisfactory  sureties  and  bond  for  faithful  performance  by  the 
successful  proposer.  No  bids  shall  be  withdrawn  after  they  have  been  opened  by 
the  Water  Commissioners. 

F.  Each  tender  must  be  accompanied  by  an  accepted  check,  draft  or  cash 
deposit  for  the  sum  called  for  in  the  form  of  tender  supplies,  which  will  be  subject 
to  forfeiture  in  case  of  failure  on  the  part  of  the  contractor  to  enter  into  a  written 
contract  with  approved  sureties  if  called  upon  to  do  so. 

This  seems  a  trifle  obscure  in  statement  and  is  therefore  an  example 
not  to  be  followed. 

The  statement  below  seems  to  be  that  all  certified  checks  will  be  for- 
feited in  case  the  successful  bidder  fails  to  enter  into  the  contract.     This, 
certainly,  is  not  what  is  intended,  but  is  what  it  says  : 

Z.  A  certified  check  for  $350  must  accompany  each  bid,  which  will  be 
forfeited  to  the  city  in  the  event  the  successful  bidder  does  not  enter  into  contract 
with  good  and  sufficient  bond  within  ten  days  from  the  date  of  the  award. 

Whether  a  Bond  or  certified  check  or  cash  shall  be  used,  deserves  more 
than  passing  attention.  In  the  sample  advertisement,  D,  provision  is  made 
for  a  certified  check,  and  this  appears  clearly  to  be  the  best  practice.  When 
a  check  is  certified,  the  bank  at  once  withdraws  the  amount  of  the  check 
from  the  depositor's  account.  The  bidder  then  loses  a  very  small  amount 
of  interest  on  his  deposit  for  the  short  time  which  elapses  before  his  check 
is  returned .  The  Advertisement  should  state  that  the  checks  of  unsuccessful 
bidders  will  be  promptly  returned. 


13—14  ADVERTISEMENT 

A  surety  company's  Bond  involves  an  expense  to  the  Contractor  which 
he  does  not  care  to  assume.  In  addition  to  that  a  Bond  seems  inappropriate 
for  this  purpose.  There  is  no  contingency  arising  of  the  character  that 
demands  a  Bond.  The  bidder,  if  he  is  to  take  the  Contract,  must  have 
sufficient  financial  responsibility  and  credit  so  that  the  filing  of  a  certified 
check  is  not  in  any  way  a  serious  burden  to  him,  and  he  is  clearly  the 
proper  party  to  protect  the  City,  railroad,  or  Owner  in  case  he  fails  to  sign 
the  Contract  if  awarded  to  him.  A  Bond  in  a  general  way  is  to  cover  a  more 
remote  contingency  which  neither  he  nor  the  party  letting  the  Contract 
anticipates  will  ever  occur.  The  Bond  is  appropriate  to  provide  for  the  ful- 
filment of  the  Contract,  but  seems  inappropriate  for  the  preliminary  deposit. 
Furthermore,  the  party  letting  the  Contract  is  somewhat  likely  to  find  it 
necessary  to  sue  on  a  Bond  in  case  of  dispute,  so  that  the  Bond  is  advan- 
tageous neither  to  the  Contractor  nor  to  the  other  party  of  the  proceeding, 
the  railroad,  the  City,  the  Owner. 

A  certified  check  without  conditions  is  substantially  equal  to  cash. 
Unless  it  is  without  conditions  it  should  not  be  accepted.  In  the  case  of 
cash  no  suit  is  possible  unless  the  bidder  sues  to  recover  it,  in  which  case 
the  burden  of  proof  is  on  him  and  any  delay  is  to  his  disadvantage.  It 
seems  somewhat  harsh,  also,  to  compel  a  bidder  to  furnish  cash  and  in 
many  cases  such  a  requirement  would  operate  to  prevent  bids  being  made 
and  so  defeat  the  object  of  the  competition. 

In  the  case  of  a  certified  check,  it  is  conceivable  that  the  bidder  might 
send  word  to  the  bank  to  stop  payment  in  case  he  had  any  disagreement 
or  dispute  with  the  party  letting  the  Contract.  But  bankers  state  that,  in 
general,  a  bank  would  be  very  slow  to  refuse  payment  on  a  certified  check 
and  the  reasons  for  refusing  payment  would  have  to  be  very  clear  and 
satisfactory  to  the  bank.  The  depositor  has  no  legal  right  to  stop  payment. 
In  the  case  of  a  bank  in  some  small  city  or  town,  it  might  happen  that 
the  bidder  was  an  officer  or  director  of  the  bank  and  could  secure  non- 
payment even  of  a  certified  check,  in  which  case  suit  could  be  brought 
against  the  bank  with  good  prospect  of  success.  To  avoid  difficulty  of 
this  sort,  it  is  wise  to  specify  that  the  check  shall  be  drawn  on  some  bank 
either  of  a  specified  neighboring  city  or  of  one  of  the  larger  cities  of  the 
country. 

It  is  wise  in  case  of  a  certified  check  to  carefully  inspect  the  certifica- 
tion, because  in  some  cases  a  rubber  certifying  stamp  has  been  used  for 
certification  and  the  signature  has  been  that  of  the  cashier  of  the  firm  who 
bids  and  not  of  the  cashier  of  the  bank.  In  the  Proposal  a  provision  should 
be  inserted  to  take  care  of  this  matter.  It  is  clear  that  an  informality  of 
this  sort  whenever  discovered  should  make  a  bid  informal  and  require  that 
it  be  thrown  out. 


ADVERTISEMENT  13-15 

Sometimes  a  New  York  draft  is  suggested,  but  in  the  opinion  of  some 
bankers  this  is  not  so  good  a  protection  to  the  party  letting  the  Contract 
as  a  certified  check,  in  the  general  practice  of  banking,  because  an  order  to 
stop  payment  on  a  New  York  draft  might  be  accepted  by  a  bank  which 
would  refuse  to  stop  payment  on  a  certified  check.  A  cashier's  check  is 
seldom  specified  and  has  no  particular  advantage. 

The  provision  is  further  made  that  a  Bond  shall  be  required  for  the 
faithful  performance  of  the  Contract.  The  amount  of  this  Bond  should 
be  determined  by  the  amount  of  protection  needed,  and  in  the  case  of  some 
Contracts  the  percentage  of  the  total  amount  of  the  Contract  will  be  quite 
different  from  what  it  would  be  in  others.  Twenty-five  per  cent  of  the  Con- 
tract price  is  a  very  common  provision.  According  to  present  practice, 
the  charge  made  by  bonding  companies  depends  upon  the  total  Contract 
price,  rather  than  upon  the  amount  of  the  Bond  required.  A  Bond  un- 
necessarily large,  however,  should  not  be  specified,  because  the  bonding 
company  may  refuse  to  bond  some  efficient  and  desirable  Contractor  who 
has  not  acquired  high  financial  standing  and  credit  but  who  could  readily 
secure  a  Bond  for  a  reasonable  amount.  Good  judgment  should  be  used 
in  fixing  the  amount  of  the  construction  Bond. 

The  Bond  should  be  from  an  approved  surety  company;  a  personal 
Bond  is  less  satisfactory  in  many  ways.  In  the  majority  of  cases,  an  in- 
dividual acting  as  bondsman  would  probably  refuse  to  pay  unless  suit  was 
brought  against  him.  Experience  has  shown  that  in  a  city  a  citizen  serv- 
ing as  bondsman  on  a  city  Contract  has  seldom  been  sued ;  there  is  an  ele- 
ment of  unpopularity  about  it.  A  surety  company  is  in  business  of  that 
kind  and  has  a  reputation  to  maintain,  and  any  trivial  refusal  might  seriously 
affect  its  reputation,  so  that  suit  would  seldom  be  necessary.  Furthermore, 
the  surety  company  fully  understands  that  it  is  part  of  its  business  to  in- 
vestigate the  bidder,  as  to  both  his  financial  responsibility  and  his  ability 
as  a  Contractor,  before  accepting  him,  so  that  the  surety  company's  Bond 
is  a  considerable  assurance  against  any  difficulty  occurring,  while  a  personal 
bond  simply  serves  to  make  good  a  loss.  Furthermore,  in  case  otf  the 
death  or  failure  of  the  Contractor,  the  surety  company  often  has  facilities 
for  putting  another  Contractor  promptly  upon  the  work,  and  this  is  a 
further  assurance  against  trouble  occurring  and  one  which  does  not  exist 
in  the  case  of  a  personal  Bond.  Similar  advantages  of  a  surety  company's 
Bond  exist  where  bank  or  public  officials  are  required  to  be  under  Bond. 

If  the  Contractor  is  a  man  of  unquestioned  financial  responsibility,  the 
requirement  of  a  Bond  from  a  surety  company  would  seem  to  be  unneces- 
sary, unless,  in  the  case  of  State  or  City,  some  statute  or  ordinance  requires 
it.  The  Chief  Engineer  of  a  railroad  might  often  show  good  judgment  in 
not  requiring  it.  In  the  long  run  the  Company  pays  the  cost  of  the  Bond. 


13-16  ADVERTISEMENT 

It  seems  to  be  well  recognized  that  the  Advertisement  should  state 
when  the  work  is  to  be  begun  and  when  completed,  and  this  seems  to  be 
wise  and  proper  provision ;  a  Contractor  whose  force  is  engaged  upon  a 
Contract  not  quite  completed  may  often  find  it  undesirable  to  bid  on 
work  which  must  start  before  his  other  Contract  is  out  of  the  way.  A 
difference  of  a  few  weeks  sometimes  would  make  a  difference  as  to  whether 
or  not  he  should  bid,  and  the  information  is  sufficiently  valuable  so  that  it 
ought  to  appear  in  the  Advertisement  of  every  Contract. 

There  are  sometimes  peculiar  legal  requirements  to  be  observed  in 
connection  with  the  letting  of  Contracts  or  in  making  bids,  and  in  such 
cases  it  is  often  extremely  desirable  that  these  provisions  should  be  speci- 
fied as  early  as  in  the  Advertisement  and  not  left  for  the  Information  for 
Bidders.  The  following  examples  illustrate  this  point : 

a.  The  usual  conditions  relating  to  tendering  as  prescribed  by  City  By-Law 
must  be  strictly  complied  with,  or  the  tenders  will  not  be  entertained. 

6.  No  bid  will  be  considered  unless  accompanied  by  a  certificate  from  the  City 
Solicitor  that  the  provisions  of  an  ordinance  requiring  proposal  bonds  when  the 
bids  exceed  in  amount  five  hundred  dollars,  approved  May  25,  1860,  have  been 
complied  with. 

c.  All  contracts  for  State  highway  construction  are  subject  by  law  to  the 
approval  of  the  State  Geological  Survey  Commission  and  must  be  so  approved 
before  they  can  be  executed. 

d.  All  bids  and  the  contract  shall  be  subject  to  all  the  provisions,  terms  and 
conditions  of  said  ordinance  and  of  an  Act  of  the  General  Assembly  of  Colorado 
entitled,  "An  Act  to  Provide  for  the  Construction  of  Local  Improvements  in  Cities 
of  all  Classes,"  etc.,  approved  April  8,  1899,  being  Chapter  151  of  the  Session  Laws 
of  1899. 

e.  Bidders  must  have  paid  their  City  License  in  order  that  their  bids  may  be 
accepted. 

In  the  case  of  State  or  municipal  work,  or  other  public  work,  the 
services  of  an  attorney  are  commonly  available,  and  compliance  with  all 
technical  requirements  of  law  should  depend  upon  their  advice.  Labor 
laws  in  particular  have  of  late  years  attained  such  importance  that  a 
lawyer's  advice  as  to  proper  compliance  with  them  is  substantially  neces- 
sary in  all  public  work. 

Provisions  for  reserving  the  right  to  reject  all  bids  depends  somewhat 
on  the  requirements  of  Statute  Law.  Where  there  is  a  requirement  that 
the  Contract  shall  be  let  to  the  lowest  bidder,  the  form  of  statement  must 
be  different  from  that  where,  as  is  very  common,  the  "  right  to  reject  any 
or  all  bids  is  reserved." 


ADVERTISEMENT  13-17 

Forms  in  use  appear  as  follows : 

/.    The  right  to  reject  any  or  all  bids  is  reserved. 

g.     Commissioners  reserve  the  right  to  reject  any  and  all  bids. 

h.  The  Commission  reserves  the  right  to  reject  any  or  all  proposals  and  to 
accept  the  proposal  deemed  best  for  the  Commonwealth. 

The  statement  as  to  where  the  forms  of  Proposal,  etc.,  and  as  to  where 
the  plans  may  be  seen  is  sometimes  modified  by  statements  that  plans 
and  forms  may  be  seen  also  in  some  central  place,  perhaps  in  New  York 
City,  Chicago,  Boston,  or  Washington.  The  office  of  Engineering  News, 
or  of  the  Engineering  Record  (now  consolidated)  in  New  York  has  been 
sometimes  used  for  this  purpose  in  accord  with  good  practice.  Some- 
times an  Engineer  in  New  York  City  acts  as  Consulting  Engineer  and  the 
Advertisement  specifies  his  office  as  a  place  where  plans  may  be  seen. 

A  further  provision  sometimes  made  is  that  a  deposit  will  be  required  in 
order  to  take  plans,  or  plans  and  Specifications,  from  the  office.  This  is  a 
provision  by  no  means  uncommon,  but  in  the  case  of  many  Contracts  there 
is  no  occasion  for  it,  so  that  this  provision  is  not  made  a  part  of  the  sample 
Contract.  Examples  of  such  provisions  are  shown  below : 

i.  Sets  of  plans  may  be  taken  from  the  office  upon  making  a  deposit  of  two 
dollars  for  each  set  taken ;  this  deposit  to  be  refunded  upon  return  of  plans. 

.;.  A  deposit  of  $10  (Ten  Dollars)  will  be  required  for  use  of  plans  and  speci- 
fications, which  will  be  returned  upon  letting  of  contracts. 

k.  The  specifications  and  blue-prints  of  Contract  plans  may  be  seen  at  the 
office  of  the  Bureau  of  Filtration,  and  a  limited  edition  can  be  obtained  by  bona- 
fide  intending  bidders  on  making  a  deposit  varying  from  $10  to  $25  for  the  speci- 
fications, and  from  $50  to  $200  for  the  Contract  plans,  which  amounts  will  be 
returned  on  return  of  the  specifications  and  plans  hi  good  condition. 

/.  A  payment  of  two  dollars  ($2)  will  be  required  for  copies  of  the  pamphlet 
containing  the  contract,  specifications,  etc. ;  the  same  to  be  returned  in  case  the 
person  taking  the  copy  makes  a  bid  for  the  work  in  the  form  contained  in  said 
pamphlet,  or  returns  the  pamphlet  before  the  time  of  opening  the  bids. 

These  provisions  apparently  should  occur  in  the  Advertisement  rather 
than  in  the  Information  for  Bidders,  but  may,  perhaps,  properly  occur  in 
both. 


CHAPTER  XIV 
INFORMATION   FOR  BIDDERS 

THE  term  Information  for  Bidders  seems  somewhat  preferable  to 
Notice  to  Contractors,  although  the  latter  is  also  common.  It  matters 
little,  however,  which  is  used.  One  form  in  use  reads  Requirements  for 
Bidding  and  Instructions  to  Bidders. 

Under  this  head  should  be  included  all  the  information  contained  in  the 
Advertisement,  in  some  cases  in  greater  detail  or  more  extended  form, 
together  with  other  information  necessary  to  enable  a  Contractor  to  make 
an  intelligent  and  proper  bid.  It  is  not  important  to  economize  space  or 
to  make  the  information  unduly  concise.  The  Contractor  or  bidder  who 
has  become  interested  can  be  expected  to  read  what  is  written,  the  cost  of 
printing  is  small,  and  all  such  information  or  instruction  as  seems  necessary 
or  wise  should  be  included. 

The  following  is  given  as  a  sample  or  standard  form  containing  many 
desirable  features : 

A.  Information  for  Bidders 

Board  of  Sewer  Commissioners 
of  the  City  of  Franktown,  Mass. 

Sealed  proposals  or  bids  for  the  construction  of  a  sewer  will  be  received  by 
the  Board  of  Sewer  Commissioners  of  the  City  of  Franktown,  Mass.,  at  their 
office  in  the  City  Hall,  until  two  o'clock  P.M.,  Thursday,  March  10,  1917,  at  which 
time  and  place  the  bids  will  be  publicly  opened  and  read  aloud. 

The  Proposal  should  be  enclosed  in  a  sealed  envelope  addressed  to  the  Board  of 
Sewer  Commissioners  of  the  City  of  Franktown,  and  indorsed  "Proposal  for  Sewer 
Construction,  to  be  opened  March  10,  1917,"  and  delivered  to  the  Board  or  its 
clerk.  The  sealed  envelope  will  be  deposited  hi  a  locked  box  provided  for  that 
purpose.  No  bid  shall  be  withdrawn  for  any  purpose  whatever  after  it  has  been 
deposited. 

Plans  may  be  seen,  and  form  of  Proposal,  Specifications,  Contract,  and  Bond 
may  be  obtained  from  Richard  Roe,  City  Engineer  of  Franktown,  Mass.,  at  his 
office  in  the  City  Hall. 

All  bids  shall  be  made  on  the  blank  form  of  Proposal  annexed  hereto,  shall  give 
the  price  for  each  item  of  the  proposed  work  in  ink  and  stated  both  in  words  and 
figures,  and  shall  be  signed  and  sworn  to  by  the  bidder  with  his  full  name,  and  with 

14—1 


14-2  INFORMATION  FOR  BIDDERS 

his  business  address  and  place  of  residence ;  in  case  of  a  firm,  the  name  and  resi- 
dence of  each  and  every  member  of  the  firm  shall  be  inserted ;  and  in  case  the  bid 
shall  be  submitted  by  or  in  behalf  of  a  corporation,  it  shall  be  signed  in  the  name 
of  such  corporation,  by  some  duly  authorized  agent  thereof  who  shall  also  subscribe 
his  own  name  and  the  title  of  his  office  and,  if  practicable,  the  seal  of  the  corpora- 
tion shall  be  affixed. 

Each  bid  must  be  accompanied  by  a  certified  check  drawn  upon  a  national 
bank  or  trust  company  established  in  the  City  of  Boston  or  the  City  of  New  York, 
and  certified  by  the  cashier  (or  other  suitable  officer)  of  the  bank  upon  which  it  is 
drawn,  for  four  thousand  five  hundred  dollars  ($4,500),  payable  to  the  order  of 
the  Board  of  Sewer  Commissioners  of  the  City  of  Franktown,  such  check  to  be  re- 
turned to  the  bidder  unless  forfeited  under  the  condition  herein  stipulated.  This 
check  should  not  be  enclosed  in  the  sealed  envelope  containing  the  bid,  but  should 
be  delivered  to  the  Board  or  its  secretary,  who  will  give  a  proper  voucher  for  the 
deposit.  All  such  deposits,  except  that  made  by  the  bidder  to  whom  the  Contract 
shall  be  awarded,  will  be  returned  to  the  person  or  persons  making  the  same  within 
three  days  after  the  execution  of  the  Contract  and  filing  of  the  surety  company's 
Bond,  or  in  case  of  the  rejection  of  all  bids  within  three  days  after  such  rejection. 

A  Bond  in  the  sum  of  thirty-five  thousand  dollars  ($35,000)  with  a  surety  com- 
pany satisfactory  to  the  Board,  as  surety,  will  be  required  for  the  faithful  perform- 
ance of  the  Contract,  and  the  Proposal  shall  state  the  name  and  address  of  the 
surety  company  or  surety  companies  which  will  be  offered  as  surety  in  case  the 
contract  is  awarded  to  the  bidder. 

The  party  to  whom  the  Contract  is  awarded  will  be  required  forthwith  to  execute 
in  triplicate  the  Contract  in  the  form  on  file  in  the  office  of  the  City  Engineer  as 
specified  in  the  Proposal,  and  to  provide  the  Bond  of  a  surety  company  satisfactory 
to  the  Board,  all  within  ten  days  (not  including  Sundays  or  holidays)  from  the 
date  when  a  written  notice  of  the  award  of  the  Contract  is  mailed  to  the  bidder 
at  the  address  given  by  him ;  in  case  of  his  failure  to  do  so,  the  Board  of  Sewer 
Commissioners  may  at  its  option  consider  that  the  bidder  has  abandoned  the  Con- 
tract, in  which  case  the  certified  check  accompanying  the  Proposal  shall  become  the 
property  of  the  Board,  and  in  consideration  of  the  receipt  by  the  Board  of  said 
certified  check  and  the  payment  thereof,  this  Proposal  and  its  acceptance  shall 
become  in  other  respects  null  and  void,  and  the  Board  shall  be  at  liberty  to  make 
other  Contracts  with  other  parties  as  it  sees  fit. 

After  signing  of  the  Contract  and  the  acceptance  of  the  Bond  by  the  Board, 
the  certified  check  of  the  successful  bidder  shall  be  returned  forthwith. 

All  bids  will  be  compared  on  the  basis  of  the  City  Engineer's  estimate  of  the 
quantities  of  work  to  be  done  as  follows : 

Item  1.    1971  lineal  feet  of  7'  6"  sewer 

Item  2.   2417  lineal  feet  of  1'  9"  sewer 

Item  3.    1557  lineal  feet  of  8'  0"  sewer 

Item  4.     440  lineal  feet  of  8'  6"  sewer 

All  to  be  of  circular  form  and  built  of  reinforced  concrete,  and  prices  to  include 
excavation  and  backfilling. 

Item  5.   Manholes 

Item  6.   Catch  basins 

Item  7.   Branch  pipes  for  house  connections. 

It  is  expressly  understood  that  the  foregoing  quantities  are  approximate  only ; 
that  they  are  stated  merely  as  a  basis  for  the  comparison  of  bids ;  that  the  Board 


INFORMATION   FOR   BIDDERS  14-3 

does  not,  expressly  or  by  implication,  agree  that  the  actual  amount  of  work  will 
correspond  with  the  said  quantities ;  and  that  the  amount  of  work  may  be  more  or 
less  than  the  said  quantities,  and  may  be  increased  or  diminished  as  may  be  deemed 
necessary  by  the  City  Engineer.  An  increase  or  decrease  in  the  quantity  for  any 
item  shall  not  be  regarded  as  a  sufficient  ground  for  an  increase  or  decrease  in  the 
prices,  nor  in  the  tune  allowed  for  the  completion  of  the  work,  except  as  provided 
in  the  Contract. 

The  Board  reserves  the  right  to  reject  any  or  all  bids  or  to  accept  any  bid,  should 
it  deem  it  for  the  interests  of  the  City  so  to  do. 

The  work  is  to  commence  within  ten  days  after  the  signing  of  the  Contract,  unless 
the  Engineer  shall,  in  a  writing,  approved  in  writing  by  a  majority  of  the  Board, 
authorize  a  further  delay ;  and  is  to  be  continued  with  regularity,  except  during 
unsuitable  weather,  until  its  completion ;  and  the  entire  work  shall  be  completed 
on  or  before  November  1,  1917,  unless  the  City  Engineer  shall  in  a  writing,  ap- 
proved in  writing  by  a  majority  of  the  Board,  designate  some  later  date. 

Before  the  award  of  the  Contract,  any  bidder  may  be  required  to  show  to  the 
satisfaction  of  the  Board  that  he  has  the  necessary  facilities,  ability,  and  financial 
resources  to  perform  the  work  in  a  satisfactory  manner  and  within  the  time  stipu- 
lated, and  that  he  has  had  experience  in  constructing  works  of  the  same  or  a  similar 
nature,  and  to  give  references  which  will  enable  the  Board  to  satisfy  itself  as  to  his 
qualifications  for  doing  the  work. 

Proposals  which  are  incomplete,  unbalanced,  conditional,  or  obscure,  or  which 
contain  additions  not  called  for,  erasures,  alterations  or  irregularities  of  any  kind, 
or  which  do  not  comply  with  the  Instructions  to  Bidders,  may  be  rejected  as  in- 
formal at  the  option  of  the  Board. 

The  Board  will  not  receive  the  bids  of  persons  in  arrears  to  the  City  or  who  are 
in  default,  either  as  Contractors  or  sureties,  or  with  whom  a  suit  as  to  arrears  or 
default  is  pending,  and  the  decision  of  the  Board  on  these  matters  shall  be  final. 

The  bidder  shall  provide  the  Engineer  of  the  Board  all  possible  facilities  for 
examining  the  quality  of  the  materials  proposed  to  be  furnished,  and  for  obtaining 
such  samples  as  he  may  require.  The  materials  furnished  under  the  Contract 
must  equal  in  quality  said  samples  and  be  satisfactory  to  the  City  Engineer. 

Bidders  must  satisfy  themselves,  by  personal  examination  of  the  location  of  the 
proposed  work,  and  by  such  other  means  as  they  may  prefer,  as  to  the  actual  con- 
ditions and  requirements  of  the  work  and  the  accuracy  of  the  foregoing  estimate  of 
the  City  Engineer,  and  shall  not,  at  any  time  after  the  submission  of  a  bid,  dis- 
pute or  complain  of  such  statement  or  estimate  of  the  City  Engineer,  nor  assert 
that  there  was  any  misunderstanding  in  regard  to  the  nature  or  amount  of  work 
to  be  done. 

The  bidder  is  expected  to  make  himself  familiar  with  the  laws  of  the  State  and 
the  ordinances  of  the  municipality  which  refer  to  the  employment  of  labor,  or  the 
letting  or  carrying  out  of  Contract  work,  and  to  observe  and  comply  therewith, 
whether  or  not  special  attention  is  called  to  them  herein  or  in  the  Proposal,  Con- 
tract, or  Specifications  which  accompany  this  Information  for  Bidders. 

The  bidder  shall  not  have  assistance  or  advice  from  employees  of  the  City  or 
of  any  department  of  public  works  in  preparing  his  bids.  Each  bidder  is  required 
to  state  in  his  bid  the  names  of  all  persons  interested  with  him,  and  if  no  other 
person  be  so  interested,  he  shall  distinctly  state  the  fact ;  also  that  it  is  made  with- 
out any  connection  with  any  other  person  making  any  bid  for  the  above  work ; 
also  that  the  bid  is  in  all  respects  fair,  and  made  without  collusion  or  fraud ;  and 


14-4  INFORMATION  FOR  BIDDERS 

that  no  person  acting  for,  or  employed  by  the  City  of  Franktown  is  directly  or  in- 
directly interested  therein,  or  in  the  supplies  or  work  to  which  it  relates,  or  in  any 
portion  of  the  profits  thereof.  The  Proposal  must  be  sworn  to  before  some  official 
authorized  to  administer  oaths. 

Bidders  are  invited  to  be  present  at  the  opening  of  bids. 

JOHN  DOE, 

HIRAM  WEEKS, 

ARTHUR  SMITH, 

Board  of  Sewer  Commissioners. 
RICHARD  ROE,  City  Engineer. 

In  the  above  sample  form  many  of  the  desirable  features  found  in  forms 
in  actual  use  have  been  incorporated,  and  to  these  have  been  added  others 
which  seemed  in  some  way  worth  while.  Other  wordings  may  seem  prefer- 
able to  Engineers  preparing  forms  for  their  own  work,  and  extracts  from 
various  pamphlets  are  added  here  for  assistance  and  suggestions. 

The  following  explains  itself : 

B.  Sealed  bids  or  proposals,  addressed  to  the  Metropolitan  Water  Board,  and 
indorsed  "Proposal  for  building  Section  8  of  the  Nashua  Aqueduct,"  will  be  re- 
ceived at  the  office  of  the  Board,  3  Mt.  Vernon  Street,  until  12  o'clock,  noon,  of 
Thursday,  the  fourth  day  of  June,  1896,  and  at  that  time  and  place  will  be  publicly 
opened  and  read. 

The  only  important  point  of  difference  is  that  the  sample  form  says 
"read  aloud." 

A  form  prescribed  by  statute  for  use  in  one  of  the  large  cities  reads : 

C.  Bids  must  be  made  in  duplicate,  the  duplicate,  without  check,  to  be  deposited 
with  the  City  Auditor  previous  to  the  time  named  for  opening  bids. 

In  case  of  discrepancy  the  copy  in  the  City  Auditor's  office  is  considered 
the  official  Proposal.  There  is  no  provision  that  the  bids  in  the  Auditor's 
office  shall  be  publicly  opened,  and  the  opportunity  for  collusion  or 
irregularity  to  occur  is  apparently  increased  rather  than  decreased.  Any 
bidder  might  properly  object  to  filing  his  duplicate  bid  in  the  City  Auditor's 
office  unless  this  was  done  a  few  minutes  before  the  time  set  for  opening  bids. 

Some  forms  provide  that : 

D.  In  the  presence  of  the  person  offering  the  bid  it  will  be  deposited  in  a  sealed 
box  provided  for  that  purpose. 

This  does  not  refer  to  the  deposit  with  the  Auditor.  The  provision 
for  placing  in  a  locked  box  is  not  yet  altogether  common,  and  it  is  not 
always  provided  that  bids  may  not  be  withdrawn  after  being  deposited. 
Withdrawal  up  to  the  time  of  opening  the  bids  might  seem  reasonable,  but 
when  the  bidders  are  not  well  known,  it  is  well  to  guard  against  the  possible 


INFORMATION  FOR   BIDDERS  14-5 

unauthorized  withdrawal  of  a  bid.  Withdrawal  from  a  sealed  box,  of 
course,  is  out  of  the  question,  although  withdrawal  might  be  allowed  after 
opening  the  box  and  before  the  opening  of  any  bid,  if  it  should  seem  desirable 
to  do  so. 

There  is  an  advantage  sometimes  in  having  plans  and  forms  available 
in  large  cities,  as  illustrated  below : 

E.  Plans  may  be  seen,  and  specifications,  form  of  proposal,  bond  and  contract 
obtained  at  the  office  of  the  Engineer  of  the  Board  of  Water  Commissioners,  and 

at  the  office  of  Blank  &  Blank,  Consulting  Engineers, Park  Avenue,  New 

York  City. 

Alternative  forms  used  are  as  follows  : 

F.  All  bids  shall  be  made  on  the  blank  form  of  proposal  annexed  hereto,  shall 
give  the  price  for  each  item  of  the  proposed  work,  both  in  writing  and  in  figures. 

G.  All  proposals  must  be  made  upon  the  blank  form  herein  contained ;  must 
give  the  prices  for  each  and  all  items  of  the  work  proposed,  both  in  words  and 
figures  in  ink ;  and  be  signed  by  the  bidder  with  his  business  address  and  place  of 
residence. 

H.  All  bids  must  be  made  upon  the  blank  form  hereto  annexed.  Bidders  will 
state  prices  for  each  separate  item  of  the  work,  by  which  the  bids  will  be  com- 
pared. These  prices  are  to  cover  all  the  expenses  incidental  to  the  completion  of 
the  work  in  full  conformity  with  the  specifications.  The  prices  bid  must  be  stated 
both  in  words  and  in  figures.  All  bids  which  do  not  contain  prices  for  all  the  items 
which  are  called  for  in  the  forms  for  bids,  or  which  are  otherwise  not  in  conformity 
with  this  notice,  will  be  rejected. 

The  use  of  the  blank  forms  provided  has  been  discussed  in  connection 
with  the  Advertisement ;  it  secures  uniformity  and  makes  it  certain  that 
the  bidder  undertakes  to  sign  the  Contract  in  the  required  form,  and  to 
forfeit  his  certified  check  if  he  fails  to  do  so.  The  use  of  words  and  figures 
in  the  bid  serves  to  prevent  any  mistake  in  reading  the  prices  bid,  and  is  a 
requirement  properly  made  in  Information  for  Bidders,  rather  than  in  the 
Advertisement. 

In  cases  where  full  printed  forms,  bound  in  a  pamphlet,  are  not  used, 
the  phraseology  should  be : 

7.  All  bids  shall  be  made  on  the  blank  form  of  Proposal  provided  by  the  Board 
for  that  purpose. 

The  statement  that  each  bid  must  be  accompanied  by  a  certified  check 
repeats  the  statement  made  in  the  Advertisement,  which  is  discussed  in 
connection  with  it.  The  details  as  to  returning  or  forfeiting  the  checks 
belong  to  Information  for  Bidders,  and  need  not  be  elaborated  in  the 
Advertisement. 


14-6  INFORMATION   FOR  BIDDERS 

Various  readings  are  used : 

J.  All  such  deposits,  except  that  of  the  successful  bidder,  will  be  returned  on 
demand  to  the  persons  making  the  same,  within  three  days  after  the  contract  is 
awarded. 

K.  Within  three  days  after  the  decision  as  to  who  shall  receive  the  contract. 

L.  After  the  execution  of  the  contract  and  the  acceptance  of  the  bond  by  the 
Commissioners  of  Sewerage,  the  check  accompanying  the  proposal  of  the  success- 
ful bidder  shall  be  returned. 

The  Contract  is  not  fully  awarded  until  the  formal  Contract  is  executed 
and  the  surety  company's  Bond  filed.  The  second  bidder  and  the  other 
higher  bidders  should  not  be  discharged  before  the  transaction  is  completed 
by  the  execution  of  the  Contract  and  filing  of  the  Bond,  or  by  the  rejec- 
tion of  all  bids. 

Other  readings  taken  from  forms  for  Information  fpr  Bidders  are  as 
follows : 

M .  A  bond  in  the  sum  of dollars  with  a  surety  company  satis- 
factory to  the  Company,  will  be  required  for  the  faithful  performance  of  the  con- 
tract. 

N.   A  bond  in  the  sum  of dollars  will  be  required  to  be  executed  by 

the  party  to  whom  the  contract  is  awarded  with  an  incorporated  surety  company 
duly  authorized  to  execute  the  same. 

Satisfactory  security  is  further  made  a  part  of  the  above  provision. 

0.   A  bond  in  the  amount  of dollars  will  be  required  for  the 

faithful  performance  of  the  contract.  The  name  and  address  of  each  surety  offered 
must  be  stated  in  the  bid  or  proposal.  The  surety  must  be  satisfactory  to  the 
Board. 

P.  An  approved  surety  company  is  required. 

Q.  A  bond  will  be  required  for  the  faithful  performance  of  the  contract  in  such 
sum  as  shall  be  fixed  by  the  Commission  after  the  bids  are  opened,  said  sum  to  be 
not  less  than  one-fourth  nor  more  than  one-half  of  the  amount  of  the  contract. 

This  appears  to  be  an  undesirable  provision ;  the  amount  of  the  Bond 
should  be  a  definite  sum  fixed  before  the  letting.  Otherwise  there  is  no 
assurance  that  all  bidders  will  receive  equal  treatment  if  awarded  the 
Contract.  The  same  criticism  applies  to  the  following: 

R.  A  bond  will  be  required  for  the  faithful  performance  of  the  contract  in  a 
sum  not  less  than  ten  and  not  exceeding  twenty-five  per  cent  of  the  amount  of  the 
contract,  with  two  or  more  sureties  (who  must  be  residents  of  Massachusetts) 
satisfactory  to  said  Board,  or  an  approved  surety  company. 


INFORMATION   FOR  BIDDERS  14-7 

In  connection  with  the  furnishing  of  the  Bond,  comes  the  provision 
that,  with  the  bid,  shall  go  a  statement  with  relation  to  the  surety  offered, 
and  the  following  are  additional  forms : 

S.  The  bidder  is  required  to  state  below  the  names  and  addresses  of  the  sureties 
offered  as  security  on  the  bonds  to  be  given  for  the  faithful  performance  of  the 
contract,  and  the  amount  in  which  each  will  qualify. 

T.  The  bidder  is  requested  to  name  the  sureties  or  the  surety  company  who 
will  sign  his  bond  in  case  the  contract  is  awarded  him. 

U.  The  bidder  shall  here  give  the  name  and  address  of  the  surety  company 
that  will,  if  acceptable,  sign  his  bond. 

V.  The  bidder  is  required  to  name  a  surety  company  or  surety  companies,  one 
of  which  will  sign  his  bond  in  case  the  contract  is  awarded  to  him. 

The  provision  for  forfeiture  of  the  certified  check  differs  materially  in 
different  readings,  not  only  in  form,  but  also  in  legal  effect.  The  provision 
for  execution  of  the  Contract  in  triplicate  is  a  detail ;  one  copy  commonly 
goes  to  the  City,  one  to  the  Contractor,  one  to  the  City  Auditor  as  a  basis 
for  his  auditing  the  monthly  and  final  estimates. 

It  should  be  understood  that  the  Proposal  is  an  offer  which  when 
accepted  becomes  a  legal  Contract,  and  further  attention  to  this  feature 
is  given  in  connection  with  the  Proposal,  which  should  contain  a  definite 
agreement  as  to  the  forfeiture  of  the  certified  check.  It  is  proper  that  a 
statement  with  relation  to  it  should  be  a  part  of  the  Information  for 
Bidders. 

Alternatives  to  the  provision  contained  in  the  sample  form  A  are  as 
follows : 

W.  The  contract  must  be  signed  and  the  bond  furnished  within  six  days  (Sun- 
day excepted)  after  the  date  of  the  notification  by  the  commission  of  the  acceptance 
of  the  proposal  and  readiness  of  the  contract  for  signature;  and  in  case  of  the 
failure  of  the  bidder,  after  such  notification,  to  sign  the  contract  and  to  furnish  the 
bond  within  the  said  time,  the  proposal  and  acceptance  shall  be  null  and  void,  the 
Commission  shall  be  at  liberty  to  make  other  contracts  with  other  parties  for  the 
work  as  it  sees  fit,  and  the  certified  check  accompanying  the  proposal  shall  become 
the  property  of  the  Commonwealth,  and  shall  be  retained  by  it  in  consideration 
and  full  compensation  for  all  loss,  damage,  and  delay  caused  to  the  Commonwealth 
by  the  failure  of  the  bidder  to  sign  the  contract  and  execute  the  bond  within  the 
time  aforesaid. 

X.  Within  ten  days  (not  including  Sunday)  from  the  date  of  the  mailing  of 
a  notice  from  the  Commissioners  of  Sewerage  to  the  bidder,  according  to  the  ad- 
dress given  by  him,  that  the  contract  is  ready  for  signature,  the  party  to  whom  the 
contract  is  awarded  will  be  required  to  present  forthwith  to  the  Commission  the 
name  of  the  surety  company  to  be  offered,  to  execute  the  contract  and  furnish  the 


14-8  INFORMATION   FOR  BIDDERS 

bond,  duly  executed,  with  satisfactory  surety  and,  in  case  of  his  failure  or  neglect 
so  to  do,  the  Commissioners  of  Sewerage  may  at  their  option  determine  that  the 
bidder  has  abandoned  the  contract,  and  if  the  Commissioners  of  Sewerage  deter- 
mine that  the  bidder  has  abandoned  the  contract,  then  the  certified  check  deposited 
with  the  Commissioners  and  the  amount  therein  mentioned  shall  be  retained  by 
the  Commissioners  and  shall  become  their  absolute  property  to  reimburse  them  for 
expenses,  advertising  and  delays ;  and  it  is  agreed  by  the  bidder  that  in  case  of 
his  default,  said  check  and  the  amount  thereof  may  be  collected  and  retained 
by  said  Commissioners  as  liquidated  damages  in  full  settlement  of  all  claims  against 
him  .arising  under  said  bid.  After  the  execution  of  the  contract  and  the  acceptance 
of  the  bond  by  the  Commissioners  of  Sewerage,  the  check  accompanying  the  pro- 
posal of  the  successful  bidder  shall  be  returned. 

The  clause  introductory  to  the  statement  of  the  quantities  of  various 
classes  of  work  may  take,  if  preferred,  either  of  the  following  forms : 

Y.  The  Engineer's  estimate  of  the  work  to  be  done  by  which  the  bids  will  be 
tested  is  as  follows : 

Z.  The  excavation,  the  masonry  and  other  parts  of  the  work  have  been  di- 
vided into  classes  and  items  in  order  to  enable  the  bidder  to  bid  for  the  different 
portions  of  the  work  in  accordance  with  his  estimate  of  their  costs,  so  that  in  the 
event  of  an  increase  or  decrease  in  the  quantities  of  any  particular  class  of  work 
the  actual  quantities  executed  may  be  paid  for  at  the  price  bid  for  that  particular 
class  of  work. 

The  provision  that  the  quantities  stated  are  approximate  only  has 

various  forms  as  shown  below : 

\ 

a.  As  the  above  mentioned  quantities,  though  stated  with  as  much  accuracy 
as  is  practicable  in  advance,  are  approximate  only,  bidders  are  required  to  submit 
their  estimates  upon  the  following  express  conditions,  which  shall  apply  to  and 
become  part  of  every  bid  received,  viz. : 

6.  These  quantities  are  approximate  only,  being  given  as  a  basis  for  the  compari- 
son of  bids,  and  the  Commissioners  reserve  the  right  to  increase  or  decrease  the 
amount  of  any  class  or  portion  of  the  work  as  may  be  deemed  necessary  by  the 
Engineer;  and  to  reject  any  or  all  bids  or  to  accept  any  bid,  should  the  Board 
deem  it  to  be  for  the  interests  of  the  City  so  to  do. 

c.  The  Board  reserves  the  right  to  increase  or  dimmish  the  amount  of  the 
different  classes  of  work  as  may  be  deemed  necessary  by  its  Engineer. 

d.  On  account  of  the  character  of  the  work  to  be  done,  quantities  given  above 
cannot  be  estimated  with  accuracy ;  therefore,  all  bidders  are  required  to  submit 
their  bids  upon  the  following  expressed  conditions,  viz. :   that  they  have  satisfied 
themselves  by  personal  examination  of  the  location  of  the  proposed  work ;  and^by 
such  other  means  as  they  may  elect  as  to  the  degree  of  accuracy  of  the  foregoing 
estimates ;  and  that  they  will  not  at  any  time  after  submission  of  bids  dispute  said 
estimate  nor  claim  any  misunderstanding  as  to  the  nature  or  amount  of  the  work 


INFORMATION   FOR  BIDDERS  14—9 

to  be  done,  nor  attempt  to  hold  the  Commonwealth  or  any  person  responsible  for 
the  same. 

e.  These  quantities  are  based  upon  the  construction  of  the  sewer  in  open  cut, 
are  approximate  only,  being  given  as  a  basis  for  the  comparison  of  bids,  and  the 
Commissioners  of  Sewerage  do  not  expressly  or  by  implication  agree  that  the  actual 
amount  of  work  will  correspond  therewith,  but  reserve  the  right  to  increase  or  de- 
crease the  amount  of  any  class  or  portion  of  the  work  as  may  be  deemed  necessary 
by  the  Engineer. 

It  is  sometimes  provided  that : 

/.  Quantities  shall  not  be  increased  or  decreased  by  more  than  25  per  cent  (or 
other  percentage). 

A  wording  which  is  preferable  is : 

g.  Quantities  may  be  increased  or  decreased  provided  the  net  increase  or  de- 
crease is  not  more  than  25  per  cent. 

The  difference  between  the  two  is,  in  some  cases,  vital.  Such  a  provi- 
sion, if  used,  should  also  occur  in  the  Contract,  and  in  the  identical  wording. 
The  former  reading  is  a  better  protection  against  unbalanced  bids  and 
favoritism ;  the  latter,  a  more  suitable  protection  against  unforeseen  con- 
tingencies requiring  changes  or  modifications. 

Sometimes  a  statute  or  a  municipal  ordinance  requires  letting  to  the 
lowest  bidder,  or  the  lowest  responsible  bidder.  In  many  cases  that  is  not 
required  and  the  following  alternative  forms  are  in  use : 

h.  The  right  is  reserved  to  reject  any  and  all  proposals,  or  to  accept  the  pro- 
posal deemed  best  for  the  Commonwealth. 

i.  The  right  is  reserved  to  reject  any  and  all  bids,  and  to  waive  any  defect  or 
informality,  at  the  discretion  of  the  Board. 

j.  The  Commissioners  of  Sewerage  reserve  the  right  to  select  the"bid  or  pro- 
posal, the  acceptance  of  which  will,  in  their  judgment,  best  secure  the  efficient  per- 
formance of  the  work,  or  to  reject  any  or  all  bids. 

A  simple  form  as  to  the  time  of  beginning  and  finishing  the  work  is  as 
follows : 

k.  The  work  is  to  be  commenced  within  ten  days  after  the  signing  of  the 
contract,  unless  the  Engineer  shall  authorize  or  direct  a  further  delay,  and  is  to  be 
continued  with  regularity  until  its  completion,  on  or  before 

Opinions  will  readily  differ  as  to  the  amount  of  red  tape  desirable  in 
connection  with  any  delay. 


14-10  INFORMATION   FOR  BIDDERS 

Another  form  reads : 

I.  The  Contractor  shall  begin  "active"  preparations  for  the  work. 

It  is  very  important  that  competent  men  or  corporations  be  secured 
to  do  the  work,  especially  in  work  of  this  kind.  Good-natured  incompe- 
tence is  a  hopeless  case  to  deal  with,  and  in  cases  of  important  construction 
great  care  should  be  exercised  in  order  to  secure  experienced  Contractors. 
While  it  may  not  be  pertinent  to  this  discussion,  Engineers  further  realize 
that  it  is  a  misfortune  to  have  the  Contract  awarded  at  a  price  insufficient 
to  properly  do  the  work.  The  quality  of  the  work  usually  suffers  some  in 
consequence,  even  though  efficient  inspectors  are  employed. 

As  to  the  bidder's  ability  and  responsibility,  note  the  following  forms : 

m.  The  bidder  will  be  required  to  state  what  work  of  a  similar  character  to 
that  included  in  the  proposed  contract  he  has  done  and  give  references  which 
will  enable  the  Board  to  judge  of  his  responsibility,  experience,  skill  and  business 
standing. 

n.  Each  bidder  is  required  to  make  a  statement  indicating  what  work  of  a 
similar  character  he  has  done,  and  to  give  references  which  will  enable  the  Board  to 
judge  of  his  experience,  skill  and  business  standing. 

o.  It  is  the  purpose  of  the  Commission  not  to  award  this  contract  to  any  bidder 
who  does  not  furnish  evidence  satisfactory  to  the  Commission  that  he  has  ability 
and  experience  in  this  class  of  work,  and  that  he  has  sufficient  capital  and  plant  to 
enable  him  to  prosecute  the  same  successfully,  and  to  complete  it  within  the  time 
named  in  the  contract. 

p.  Each  bidder  will  be  required  to  give  to  the  Board  satisfactory  assurance  of 
his  competency,  experience  and  responsibility. 

Forms  vary  with  relation  to  irregular,  unbalanced  or  informal  bids; 
some  say  "shall"  not  be  considered ;  some  say  "may"  not  be  considered ; 
some  give  the  Board  the  right  to  waive  irregularities.  It  probably  is  wise 
in  Contracts  made  by  large  municipalities,  to  use  the  word  "shall"  rather 
than  "may." 

Whether  a  bid  is  unbalanced  may  be  difficult  to  determine  in  some 
cases,  but  it  often  happens  that  a  bid  upon  some  item  is  so  high  or  so  low 
as  to  be  beyond  all  reason. 

The  following  readings  are  used  : 

q.  No  bid  should  be  received  that  does  not  comply  with  instructions  to  bidders, 
r.   If  a  proposal  is  not  uniform  and  is  irregular,  it  cannot  properly  be  considered. 

s.  If  the  price  for  any  item  appears  to  be  abnormally  high  or  low,  it  may  cause 
the  rejection  of  the  entire  bid. 

Unbalanced  bids  or  alternative  bids  are  among  the  means  by  which 
favoritism  and  graft  are  even  now  practiced  in  some  of  our  large  cities. 


INFORMATION   FOR  BIDDERS  14—11 

After  all  else  is  done  to  secure  honest  letting,  favoritism  may  still  be 
practiced  by  slack  enforcement  with  a  favorite  and  rigid  enforcement 
against  all  others.  This  may  be  carried  far  enough  so  that  a  knowledge  of 
what  is  to  come  may  even  discourage  bidding  by  honest  bidders. 

To  the  information  shown  above,  it  is  necessary  to  add  a  statement 
with  relation  to  certain  statutory  requirements  in  States  where  these  exist, 
as  indicated  by  an  extract  from  a  form  used  in  the  State  of  New  York, 
which  is  as  follows  : 

t.  The  attention  of  bidders  is  especially  called  to  the  provisions  of  Chapter  724 
of  the  Laws  of  1905,  and  acts  amendatory  thereof,  as  to  the  letting  of  contracts 
and  payment  for  work ;  to  "The  Labor  Law" ;  to  the  laws  and  regulations  relating 
to  mines,  quarries  and  tunnels  promulgated  by  the  Commissioners  of  Labor  of  the 
State  of  New  York,  and  to  Sections  362  and  363,  Chapter  410,  Laws  of  1882 ;  to 
the  "Public  Health  Law" ;  and  Section  482,  Chapter  466,  Laws  of  1901,  as  to  the 
health  laws. 

The  following  form  has  been  used  in  Massachusetts : 

u.  In  the  employment  of  mechanics  and  laborers,  on  the  work  to  be  done  under 
this  contract,  preference  shall  be  given  to  citizens  of  the  Commonwealth,  and,  if 
they  cannot  be  had  in  sufficient  numbers,  then  to  citizens  of  the  United  States 
(Chapter  311  of  the  Acts  of  1904).  No  employee  shall  be  required  to  lodge,  board 
or  trade  at  a  particular  place  or  with  a  particular  person.  (Revised  Laws,  chapter 
106,  section  12).  No  laborer,  workman  or  mechanic  in  the  employ  of  the  con- 
tractor, sub-contractor  or  other  person  doing  or  contracting  to  do  the  whole  or 
any  part  of  the  work  contemplated  or  included  in  this  contract  shall  be  required 
to  work  more  than  eight  hours  in  any  one  calendar  day.  (Chapter  517  of  the  Acts 
of  1906). 

It  is  not  uncommon  to  incorporate  in  the  Information  for  Bidders 
extracts  from  statutes  or  ordinances  affecting  the  employment  of  labor, 
and  this  is  sometimes  done  by  giving  references  to  such  statutes  or  ordi- 
nances, sometimes  by  quoting  them  in  full. 

Two  such  provisions  to  which  attention  has  been  called  in  actual  printed 
forms  are  these : 

v.  Bidders  are  hereby  notified  that  Section  62  of  chapter  106  of  the  Revised 
Laws  of  the  Commonwealth  requires  the  weekly  payment  of  employees  by  all 
contractors  for  public  works. 

w.  The  Contractor,  if  a  foreign  corporation,  shall  comply  with  the  provisions 
of  section etc.  relating  to  the  appointment  of  the  Commissioner  of  Cor- 
porations as  its  attorney,  upon  whom  all  lawful  processes  or  proceedings  may  be 
served,  and  shall,  as  required  by  said  sections,  file  with  the  Commissioner  of  Cor- 
porations duly  authenticated  copies  of  the  power  of  attorney  and  of  its  charter  or 
certificate  of  incorporation. 


14-12  INFORMATION  FOR  BIDDERS 

In  this  connection,  it  seems  important  that,  somewhere  in  the  Contract 
documents,  suitable  provision  shall  be  made  for  notice  to  the  Contractor. 
As  is  stated  in  the  later  chapter  on  Uniform  Contract  Form,  it  is  inappro- 
priate that  a  notice  of  suspension  or  annulment  of  work  should  be  served 
upon  the  foreman  of  the  Contractor,  unless  the  latter  has  formally  author- 
ized it.  It  seems  desirable  that  the  Contract  proper  should  provide  for 
such  notice,  and  the  Contractor  is  very  commonly  required  to  specify  an 
address  to  which  all  notices  by  mail  shall  be  sent. 

In  addition  to  what  may  be  considered  the  general  features  of  Informa- 
tion for  Bidders,  there  are  often  matters  peculiar  to  the  special  job,  and  the 
following  extracts  illustrate  this  and  may  be  valuable  as  suggestions : 

x.  Where  the  sewer  is  to  be  constructed  across  the  property  of  a  steam  railroad 
company,  the  method  of  excavation  shall  be  in  accordance  with  the  requirements 
of  said  railroad  company. 

y.  The  attention  of  bidders  is  particularly  called  to  the  fact  that  the  amount 
of  tunnel  excavation  and  of  packing  over  the  roof  will  depend  very  much  upon  the 
accuracy  with  which  the  tunnel  is  excavated,  and  they  should  therefore  depend 
wholly  upon  their  own  estimate  for  the  amount  of  such  work. 

The  item  bid  upon  in  this  work  was  "4775  lineal  feet  of  rock  or  earth 
excavation  and  refilling  in  tunnel  for  9  feet  diameter  sewer."  In  the 
Contract  a  more  extended  statement  is  made  of  various  matters  included 
in  this  item. 

z.  The  location  and  results  of  borings  made  by  means  of  a  hand  auger  or  sand 
bucket  on  the  line  of  the  sewer  are  shown  on  the  plans.  These  borings  were  made 
substantially  at  the  places  shown  on  the  plans,  were  carried  to  the  depths  there 
indicated,  and  were  made  with  reasonable  care,  and  the  materials  are  supposed  to 
be  approximately  correct.  The  samples  obtained  by  boring,  and  to  be  seen  at  the 
office  of  the  Commission,  are  supposed  to  represent  approximately  the  character 
of  material  to  be  encountered  in  the  excavations. 

aa.  The  Contractor,  in  making  his  bid,  should  take  into  account  the  probability 
that  the  character  of  the  material  to  be  excavated  and  of  that  through  which  the 
piles  are  to  be  driven  will  differ  from  indications  on  the  plans. 

bb.  Special  attention  is  called  to  the  uncertainty  of  the  length  of  the  piles  re- 
quired. 

It  should  be  understood  that  where  information  as  to  borings,  or  the 
like,  is  given,  it  must  be  shown  complete.  If  the  Contractor  has  been 
misled  by  the  suppression  or  withholding  of  information  of  this  sort  the 
courts  will  probably  grant  him  relief,  as  they  have  done  in  some  cases, 
notwithstanding  any  waiver  of  responsibility  contained  in  the  Contract 
or  the  accompanying  papers.  The  chapter  on  Specifications  further  dis- 
cusses this  matter. 


INFORMATION  FOR  BIDDERS  14-13 

As  a  further  illustration  that  the  Information  for  Bidders  should  cover 
matters  peculiar  to  the  work  in  hand,  there  are  many  interesting  features 
shown  in  the  following  form  used  in  connection  with  the  construction  of 
the  Hill  View  reservoir  for  the  Water  Supply  of  the  City  of  New  York, 
which  it  has  seemed  worth  while  to  print  in  full  without  further  comment : 


cc.  INFORMATION  FOR  BIDDERS 

This  contract  is  for  the  construction  of  Hill  View  reservoir  in  the  Hill  View  di- 
vision of  the  Southern  Aqueduct  department,  situated  east  of  the  Hudson  river  in  the 
city  of  Yonkers,  Westchester  county,  New  York,  about  one-half  mile  north  of  the 
New  York  City  line,  and  between  the  Harlem  and  Putnam  divisions  of  the  New 
York  Central  and  Hudson  River  Railroad.  The  reservoir  site  extends  from  Cen- 
tral Park  avenue  to  Kimball  avenue,  and  from  the  Empire  City  race-track  nearly 
to  McLean  avenue. 

The  reservoir  is  to  be  built  of  earth  embankments  lined  with  concrete,  rubble 
paving  and  riprap,  and  will  be  roughly  rectangular  in  shape,  about  3000  feet  long 
and  1500  feet  wide,  divided  into  two  basins  by  a  wall  which  will  contain  a  by-pass 
aqueduct,  connecting  with  the  uptake  chamber  of  the  Yonkers  siphon  at  one  end, 
and  with  the  downtake  chamber  of  the  Van  Cortlandt  siphon  at  the  other.  This 
contract  also  includes  the  construction  of  the  uptake  shaft  and  a  portion  of  the 
tunnel  of  the  Yonkers  siphon  and  the  downtake  shaft  and  a  portion  of  the  tunnel  of 
the  Van  Cortlandt  siphon.  Other  appurtenances  include  a  portion  of  a  blow-off 
conduit  and  various  roadways,  paths  and  a  fence  around  the  reservoir. 

The  site  of  the  reservoir  is  about  If  miles  west  of  Mt.  Vernon  station  on  the 
Harlem  division,  about  one  mile  east  of  Lincoln  station  on  the  Putnam  division, 
and  about  3f  miles  southeast  of  Yonkers  station  on  the  Hudson  River  division  of 
the  New  York  Central  and  Hudson  River  Railroad.  There  are  electric  railways  in 
McLean,  Central  Park  and  Yonkers  avenues,  connecting  Yonkers,  Mt.  Vernon 
and  New  York  City  with  the  reservoir  site.  The  head  of  tide-water  navigation  on 
the  East  Chester  river  at  Mt.  Vernon  is  about  4  miles  from  the  site  of  the  work, 
and  the  Hudson  river  at  Yonkers  is  about  4  miles  distant  by  existing  roads. 

The  principal  geographic  features  adjacent  to  the  site  of  this  work  are  shown  on 
the  locality  map,  which  is  Sheet  2  of  the  contract  drawings.  Complete  topog- 
raphy of  this  region  may  be  found  on  the  Harlem  quadrangle  of  the  United  States 
Geological  Survey.  All  the  work  included  in  this  contract  is  described  in  the 
accompanying  specifications  and  shown  on  a  set  of  contract  drawings. 

Sealed  bids  or  proposals  for  performing  the  work  described  herein  will  be 
received  by  the  Board  of  Water  Supply,  in  the  office  of  the  Board,  Room  910,  ninth 
floor,  299  Broadway,  New  York,  until  Wednesday,  December  8,  1909,  at  11  A.M., 
at  which  place  and  time  they  will  be  publicly  opened  by  the  Board  and  read ;  the 
award  of  the  contract,  if  awarded,  will  be  made  by  the  Board  as  soon  thereafter  as 
practicable. 

All  bids  must  be  made  upon  the  blank  form  of  proposal  attached  hereto  and 
should  give  the  price  for  each  item  of  the  work  proposed,  both  in  writing  and  in 
figures,  and  must  be  signed  and  sworn  to  by  the  bidder,  in  accordance  with  the 
directions  in  the  form  of  bid.  Each  bid  must  be  enclosed  in  the  printed  envelope 
provided  for  the  purpose  by  the  Board,  and  sealed. 


14-14  INFORMATION   FOR  BIDDERS 

No  bid  will  be  received  and  deposited  unless  accompanied  by  a  certified  check 
upon  a  National  or  State  bank,  drawn  and  made  payable  to  the  order  of  the  Comp- 
troller of  The  City  of  New  York,  for  one  hundred  thousand  dollars  ($100,000) 
for  the  proper  execution  of  the  contract.  Such  check  must  not  be  enclosed  in  the 
sealed  envelope  containing  the  bid,  but  shall  be  delivered  to  the  Board,  or  its  Secre- 
tary, who  will  give  a  proper  voucher  for  the  deposit.  All  such  deposits,  except  that 
made  by  the  bidder  to  whom  the  contract  shall  be  awarded,  will  be  returned  to  the 
person  or  persons  making  the  same  within  3  days  after  the  decision  as  to  who  shall 
receive  the  contract. 

If  the  bidder  to  whom  the  contract  shall  have  been  awarded  shall  refuse  or  neg- 
lect, within  10  days  after  due  notice  that  the  contract  has  been  awarded  to  him, 
to  execute  the  same  and  furnish  the  security  required,  the  amount  of  the  deposit 
made  by  him  shall  be  forfeited  to,  and  be  retained  by,  the  said  City  as  liquidated 
damages  for  such  neglect  or  refusal,  and  shall  be  paid  into  the  general  fund  of  said 
City,  pursuant  to  the  provisions  of  Section  30,  of  Chapter  724,  of  the  Laws  of  1905, 
but  if  the  said  bidder  to  whom  the  contract  is  awarded  shall  execute  the  contract 
and  furnish  the  said  security  within  the  time  aforesaid,  the  amount  of  his  deposit 
will  be  returned  to  him. 

Two  or  more  bonds,  the  aggregate  amount  of  which  shall  be  seven  hundred 
thousand  dollars  ($700,000),  will  be  required  for  the  faithful  performance  of  the 
contract.  Each  bond  must  be  signed  by  the  Contractor  and  the  sureties.  The 
name  and  address  of  each  surety  offered  must  be  stated  in  the  bid  or  proposal, 
together  with  the  amount  in  which  each  surety  will  qualify.  The  sureties  and  the 
amount  in  which  each  will  qualify  must  be  satisfactory  to  the  Board. 

The  bidder  whose  bid  shall  be  accepted  will  be  required  to  attend  at  the  office 
of  the  Board  in  person,  or  if  a  corporation,  by  a  duly  authorized  representative,  with 
the  sureties  offered  by  him,  and  to  execute  the  contract  and  bonds  within  10  days 
from  the  date  of  the  service  of  a  written  notice  that  the  contract  has  been  awarded 
to  him,  delivered  to  him  in  person,  or  mailed  to  the  address  given  in  the  bid ;  in  case 
of  failure  or  neglect  so  to  do,  he  may,  at  the  option  of  the  Board,  be  deemed  to  have 
abandoned  the  contract  and  as  in  default  to  The  City  under  the  provisions  of  Sec- 
tion 30,  of  Chapter  724,  Laws  of  1905. 

It  is  the  purpose  of  the  Board  of  Water  Supply  to  build  the  works  under  its 
charge  in  the  shortest  time  consistent  with  good  construction.  To  this  end  con- 
tractors will  be  required  to  use  unproved  methods  and  appliances  for  doing  the 
various  parts  of  the  work.  Complete  and  well-designed  construction  plants  and 
effective  organization  will  be  insisted  upon.  Attention  is  called  to  the  magnitude 
of  the  work  and  to  the  need  for  machinery  and  other  equipment  of  unusually  large 
capacity. 

The  attention  of  bidders  is  especially  directed  to  the  contract  requirements  as  to 
the  time  of  beginning  work,  the  rate  of  progress  and  the  date  for  completion  of  the 
several  parts  and  the  whole  of  the  work,  as  required  by  Article  VI  of  the  contract. 
In  all  stages  of  the  work  such  rates  of  progress  will  be  required  as  will  give  promise 
of  the  completion  of  all  parts  of  the  work  within  the  prescribed  time. 

The  portions  of  the  Yonkers  siphon  and  Van  Cortlandt  siphon  included  in  this 
contract,  together  with  the  uptake  and  downtake  chambers  and  the  by-pass  aque- 
duct, shall  be  so  far  completed  as  to  be  ready  to  convey  water  within  45  months  after 
the  service  of  notice  upon  the  Contractor  to  begin  work. 

Certain  provisions  of  the  specifications  involve  an  unusual  division  of  the 
work.  For  example,  the  work  of  handling  water  in  the  shafts  and  tunnels,  which 


INFORMATION   FOR  BIDDERS  14—15 

it  is  impracticable  to  exclude  during  construction,  will  be  paid  for  under  separate 
items  and  is  not  included  in  the  prices  to  be  bid  for  tunnel  excavation  and 
masonry.  Furthermore,  in  the  case  of  grouting,  owing  to  the  uncertainty  as  to 
the  quantity,  distribution,  and  conditions  of  placing  the  grout,  to  the  special  char- 
acter of  the  machinery  required,  and  to  the  great  importance  of  this  work,  the 
machinery  and  materials  and  the  various  necessary  operations  will  be  paid  for  under 
separate  items. 

The  rigid  requirements  of  the  specifications  relating  to  the  selection  and  con- 
solidation of  materials  for  refills  and  embankments,  to  the  care  of  the  reservoir 
bottom,  to  the  mixing  and  placing  of  concrete  both  in  the  tunnels  and  reservoir, 
to  the  grouting  in  the  tunnels  and  to  other  operations  which  require  special  care  to 
assure  safe,  efficient  and  water-tight  structures,  are  called  to  the  attention  of  in- 
tending bidders,  particularly  those  who  have  not  had  personal  experience  in  water- 
works construction,  and  who,  consequently,  are  liable  to  make  insufficient  allow- 
ance for  the  character  of  work  necessary. 

The  sanitary  regulations  and  the  provisions  relating  thereto  are  particularly 
called  to  the  attention  of  intending  bidders. 

For  the  convenience  of  intending  bidders,  the  lines  and  limits  of  the  proposed 
work  have  been  marked  upon  the  ground  with  sufficient  clearness  to  enable  a  per- 
son to  find  them  readily.  Conspicuous  signs  have  been  placed  at  the  shaft  sites. 

The  country  in  the  vicinity  of  the  proposed  reservoir  has  been  explored  for  sand 
and  stone  suitable  for  reservoir  construction,  and  it  is  believed  that  such  materials 
can  be  found  within  a  reasonable  distance  of  the  reservoir  site.  No  guaranty  is 
given,  however,  that  such  material  will  be  accepted  for  construction  purposes. 

Several  test  pits  have  been  excavated  on  the  reservoir  site,  most  of  which  have 
been  carried  down  to  the  elevation  of  the  bottom  of  the  reservoir  masonry.  These 
test  pits  have  been  left  open  and  may  be  inspected.  The  subsurface  investigations 
have  been  made  with  reasonable  care,  substantially  at  the  places  indicated  on  the 
drawings,  and  carried  to  the  depths  thereon  recorded.  The  difficulty  encountered 
in  excavating  the  test  pits  indicates  that  blasting  may  be  required  in  order  to  exca- 
vate the  materials  by  machinery.  Each  bidder  must  form  his  own  opinion  of  the 
character  of  the  material  to  be  excavated  from  an  inspection  of  the  ground  and 
by  his  own  interpretation  of  the  test  pits  made  by  The  City  and  from  any  other 
investigation  which  he  may  desire  to  make. 

Core  borings  have  been  made  on  or  near  the  lines  of  the  Yonkers  siphon  and 
Van  Cortlandt  siphon.  Records  of  these  borings  may  be  seen  at  the  office  of  the 
Engineer,  at  White  Plains,  New  York. 

The  public  water  supply  of  the  City  of  Yonkers  supplies  the  neighborhood  of 
Hill  View  reservoir,  and  water  mains  are  now  laid  in  McLean  and  Kimball  avenues. 
The  work  must  be  prosecuted  in  such  a  manner  that  these  water  mains  are  not  in- 
terfered with  nor  the  supply  interrupted  at  any  time. 

The  Bronx  Valley  relief  sewer,  a  tunnel  about  6|  feet  in  diameter  now  under 
construction,  crosses  the  line  of  the  Van  Cortlandt  siphon  within  the  limits  of  this 
contract,  at  the  elevation  of  about  -f-  30.  It  will  be  necessary  to  conduct  the  work 
on  the  Van  Cortlandt  siphon  in  this  vicinity  so  as  to  avoid  any  damage  to  the  sewer. 

Statement  of  Quantities.  —  The  following  is  a  statement,  based  upon  the  estimate 
of  the  Engineer,  of  the  quantities  of  the  various  classes  of  work,  and  of  the  nature 
and  extent,  as  near  as  practicable,  of  the  work  required ;  the  several  bids  will  be 
computed,  tested  and  canvassed  by  the  quantities  and  kinds  of  work  mentioned  in 
this  statement,  viz. : 


14-16  INFORMATION  FOR  BIDDERS 


Tunnel  Items 

Item    1.    Shafts  in  earth 115  linear  feet 

Item    2.     Rock  excavation  in  shafts 4,700  cubic  yards 

Item    3.    Excavation  in  tunnels 39,500  cubic  yards 

Item    4.    Additional  trimming  in  shafts  and  tunnels 100  square 

yards 

Item    5.     Furnishing  structural  steel  roof  support 166,000  pounds 

Item    6.    Erecting  structural  steel  roof  support 166,000  pounds 

Item    7.    Temporary  timbering  in  tunnels 20  Mft.  B.  M. 

Item    8.    Pumping  from  shafts  and  tunnels  during  construc- 
tion      40,000  million  foot 

gallons 
Item    9.     Drainage  channels  for  shafts  and  tunnels 3,430  linear  feet 

of   all   shafts 

and  tunnels 
Item  10.     Forms  for  lining  shafts 435  linear  ft.  of 

shaft 
Item  11.    Forms  for  lining  tunnels 2,970  linear    feet 

of  tunnel 

Item  12.     Concrete  masonry  in  shafts 2,400  cubic  yards 

Item  13.     Concrete  masonry  in  tunnels 14,400  cubic  yards 

Item  14.     Excess  concrete  masonry  in  shafts  and  tunnels  700  cubic  yards 

Item  15.     Brick  masonry  in  shafts  and  tunnels 100  cubic  yards 

Item  16.     Dry  packing  in  tunnels 850  cubic  yards 

Item  17.    Drilling    1^-inch   or    smaller   holes    in    rock    or 

masonry 400  linear  feet 

Item  18.     Drilling  1  J-inch  to  2f-inch  holes  in  rock  or  masonry  400  linear  feet 

Item  19.     Steel  pipe  for  grouting,  etc 6,000  linear  feet 

Item  20.     Miscellaneous  plant  and  equipment  for  grouting . .  lump  sum 

Item  21.     High  pressure  air-compressors  for  grouting 2  compressors 

Item  22.     Tank  grouting  machines 4  machines 

Item  23.     Grouting  pads 10  pads 

Item  24.     Making  connections  of  tank  grouting  machines  to 

grout  pipes 900  connections 

Item  25.     Setting  grouting  pads 300  settings 

Item  26.     Sand  for  grout 350  tons 

Item  27.     Mixing  and  placing  grout 500  cubic  yards 

Reservoir  and  General  Items 

Item  28.     Clearing  and  grubbing 163  'acres 

Item  29.     Removal  of  top  soil 250,000  cubic  yards 

Item  30.     Trench  excavation 10,000  cubic  yards 

Item  31.     All  ordered  excavation  in  open  cut,  except  that 

specified  under  Items  29  and  30 2,900,000  cubic  yards 

Item  32.     Special  impervious  refilling  and  embanking 1,250,000  cubic  yards 

Item  33.    All  ordered  refilling  and  embanking,  except  that 

specified  under  Items  32  and  34 1,500,000  cubic  yards 

Item  34.     Surface  dressing  and  grassing 90,000  cubic  yards 


INFORMATION  FOR  BIDDERS  14-17 

Item  35.  Portland  cement 215,000  barrels 

Item  36.  Sulphate  of  alumina  for  waterproofing  concrete, 

mortar  or  grout 35,000  pounds 

Item  37.  Concrete  in  reservoir  lining 60,000  cubic  yards 

Item  38.  Concrete  in  walls,  chambers,  etc 75,000  cubic  yards 

Item  39.  Reinforced  concrete 500  cubic  yards 

Item  40.  Reinforced  concrete  ladders 1,000  linear  feet 

Item  41.  Brick  masonry  not  in  tunnel 100  cubic  yards 

Item  42.  Rubble  masonry  and  paving  in  mortar 1,000  cubic  yards 

Item  43.  Dry  rubble  masonry  and  paving 20,000  cubic  yards 

Item  44.  Riprap 27,000  cubic  yards 

Item  45.  Crushed  stone  and  gravel 7,000  cubic  yards 

Item  46.  Placing  and  rolling  macadam  surfacing 40,000  square 

yards 

Item  47.  Telford  base 2,000  cubic  yards 

Item  48.  Cast-iron  pipe  and  special  pipe  castings 70  tons 

Item  49.  Steel  for  reinforcing  concrete 80,000  pounds 

Item  50.  Miscellaneous  cast  iron,  wrought  iron  and  steel. . .  900,000  pounds 

Item  51.  Bronze 35,000  pounds 

Item  52.  Caring  for  and  setting  metal-work   furnished  by 

The  City 600,000  pounds 

Item  53.  Plug-valves 15  valves 

Item  54.  Wire  fence 15,000  linear  feet 

Item  55.  Galvanizing 50,000  pounds 

Item  56.  Vitrified  pipe  10  inches  or  less  in  diameter 1,500  linear  feet 

Item  57.  Vitrified  pipe  larger  than  10  inches  and  not  exceed- 
ing 18  inches  in  diameter 5,000  linear  feet 

Item  58.  Timber  and  lumber  not  in  tunnel 100  M  ft.  B.  M. 

Item  59.  Stop  planks 25  M  ft.  B.  M. 

Item  60.  Locker  houses 2  houses 

Item  61.  Moving  Hammond  house lump  sum 

Item  62.  Sanitary  service 76  months 

Item  63.  Cleaning  up lump  sum 

These  quantities  are  approximate  only,  being  given  as  a  basis  for  the  uniform 
comparison  of  bids,  and  the  Board  does  not  expressly  or  by  implication  agree  that  the 
actual  amount  of  work  will  correspond  therewith,  but  reserves  the  right  to  increase 
or  decrease  the  quantity  of  any  class  or  portion  of  the  work,  as  may  be  deemed 
necessary  by  the  Engineer. 

Bidders  are  required  to  submit  their  estimates  upon  the  following  express  con- 
ditions, which  shall  apply  to,  and  become  part  of  every  bid  received,  viz.  : 

Bidders  must  satisfy  themselves,  by  personal  examination  of  the  location  of  the 
proposed  work,  and  by  such  other  means  as  they  may  prefer,  as  to  the  actual  condi- 
tions and  requirements  of  the  work  and  the  accuracy  of  the  foregoing  estimate  of 
the  Engineer,  and  shall  not,  at  any  time  after  the  submission  of  a  bid,  dispute  or 
complain  of  such  statement  or  estimate  of  the  Engineer,  nor  assert  that  there  was 
any  misunderstanding  in  regard  to  the  nature  or  amount  of  work  to  be  done. 

Attention  is  called  to  the  uncertainty  in  the  quantities  of  many  of  the  kinds 
of  work  involved  in  the  construction  of  the  shafts  and  tunnels,  where  such  quantities 
depend  upon  the  tightness,  solidity,  breakage  and  other  qualities  of  the  rock  which 


14-18  INFORMATION   FOR  BIDDERS 

cannot  be  determined  in  advance.  The  quantities  of  excavation,  excess  concrete 
masonry,  steel  roof  support  and  timbering,  pumping  and  grouting  are  especially 
subject  to  such  uncertainty.  Generally  the  intention  has  been  to  estimate  all  quan- 
tities liberally. 

An  increase  or  decrease  in  the  quantity  for  any  item  shall  not  be  regarded  as  a 
sufficient  ground  for  an  increase  or  decrease  in  the  prices,  nor  in  the  time  allowed  for 
the  completion  of  the  work,  except  as  provided  in  the  contract. 

The  excavation,  masonry  and  other  parts  of  the  work  have  been  divided  into 
classes  and  items  in  order  to  enable  the  bidder  to  bid  for  the  different  portions  of 
the  work  in  accordance  with  his  estimate  of  their  costs,  so  that  in  the  event  of  an  in- 
crease or  decrease  in  the  quantities  of  any  particular  class  of  work,  the  actual  quan- 
tities executed  may  be  paid  for  at  the  price  bid  for  that  particular  class  of  work. 

The  attention  of  bidders  is  especially  called  to  the  provisions  of  Chapter  724 
of  the  Laws  of  1905,  and  acts  amendatory  thereof,  as  to  the  letting  of  contracts 
and  payment  for  work  ;  to  "The  Labor  Law"  ;  to  the  laws  and  regulations  relating 
to  mines,  quarries  and  tunnels  promulgated  by  the  Commissioner  of  Labor  of  the 
State  of  New  York,  and  to  Sections  362  and  363,  Chapter  410,  Laws  of  1882  ;  to 
the  "Public  Health  Law"  ;  and  Section  482,  Chapter  466,  Laws  of  1901,  as  to  the 
health  laws. 

No  bid  will  be  allowed  to  be  withdrawn,  for  any  reason  whatever,  after  it  has 
been  deposited  with  the  Board  of  Water  Supply.  No  bid  will  be  accepted  from,  nor 
contract  awarded  to,  any  person  who  is  in  arrears  to  the  Corporation  of  The  City 
of  New  York,  upon  debt  or  contract  ;  nor  who  is  in  default,  as  surety  or  otherwise, 
upon  any  obligation  to  the  Corporation  of  The  City  of  New  York. 

Before  the  award  of  the  contract,  any  bidder  may  be  required  to  show  that  he 
has  the  necessary  facilities,  experience,  ability,  and  financial  resources  to  perform 
the  work  in  a  satisfactory  manner  and  within  the  time  stipulated,  and  that  he  has 
had  experience  in  constructing  works  of  the  same  or  a  similar  nature. 

The  Board  reserves  the  right  to  select  the  bid  or  proposal,  the  acceptance  of 
which  will,  in  its  judgment,  best  secure  the  efficient  performance  of  the  work,  or 
to  reject  any  or  all  bids. 

Proposals  which  are  incomplete,  conditional  or  obscure,  or  which  contain  addi- 
tions not  called  for,  erasures,  alterations,  or  irregularities  of  any  kind  may  be  rejected 
as  informal.  Failure  to  name  sureties  will  be  sufficient  cause  for  the  rejection  of  a 
proposal. 

I 


Office  of  the  Board  of  Water  Supply, 

299  Broadway,  New  York. 
Dated,  New  York,  May  15,  1909. 


CHAPTER  XV 
PROPOSAL 

THE  status,  from  the  legal  standpoint,  of  the  Proposal  should  be 
clearly  understood.  The  Proposal  is  an  offer,  and  when  this  offer  is 
accepted,  the  Proposal  and  acceptance  together  constitute  a  valid  Contract 
to  do  the  work,  and  also  to  execute  the  formal  Contract  and  to  give  Bond. 
There  are  two  parties ;  there  is  subject  matter ;  there  is  consideration  in 
that  the  bidder,  on  the  one  hand,  and  the  City,  the  Company,  or  the  Owner 
on  the  other,  are  each  bound  to  the  other ;  both  parties  have  agreed  to  the 
same  thing.  What  the  bidder,  the  Contractor,  has  agreed  to,  primarily, 
is  to  do  the  work  at  the  prices  named,  to  sign  the  formal  Contract,  and  to 
give  Bond.  The  offer  or  Proposal  resulting  in  the  agreement  as  to  each 
of  these  should  be  specific  and  not  implied.  If  the  Proposal  suitably 
refers  to  the  formal  Contract  and  thus  includes  it,  the  Proposal  and  its 
acceptance  constitute  a  Contract  as  valid  and  binding  as  the  formal  Contract 
when  signed.  There  remains,  however,  the  giving  of  the  Bond,  which  in 
some  cases  is  required  by  law  and  which  in  most  cases  is  necessary  to  pro- 
tect the  City,  the  Company,  or  the  Owner,  in  case  the  Contractor  fails  to 
fully  carry  out  his  Contract. 

If  the  Contractor  will  not  sign  the  formal  Contract  and  give  Bond  as 
he  agreed  to  do,  the  sooner  he  is  rid  of  the  better.  Nevertheless,  in  this 
case,  he  is  liable  for  damages  for  breach  of  Contract,  and  in  the  absence  of 
anything  otherwise  to  fix  these,  the  damages  are  measured  by  the  loss 
sustained.  This  will  be  the  difference  between  the  bid  accepted  and  the 
next  higher  bid,  together  with  loss  from  delay,  if  any.  In  case  of  re-letting, 
the  loss  will  include  the  difference  between  the  former  bid  and  the  bid 
accepted  at  the  re-letting,  the  loss  from  delay,  and  the  expense  involved 
in  the  re-letting. 

It  is  customary,  however,  to  include  in  the  Proposal  what  may  be  called 
a  secondary  or  supplementary  agreement  by  which  the  certified  check 
shall  be  surrendered  if  the  Contractor  fails  to  sign  the  formal  Contract  and 
give  Bond.  It  is  not  certain  that  the  surrender  of  the  certified  check  will 
relieve  the  Contractor  from  the  payment  of  damages  in  excess  of  the 

15-1 


15—2  PROPOSAL 

amount  of  the  certified  check,  if  they  can  be  proved,  unless  the  agreement 
in  some  way  limits  the  Contractor's  liability  to  the  amount  of  the  check. 
In  some  cases  it  is  provided  that  the  certified  check  shall  be  retained  as 
liquidated  damages ;  in  others,  the  words  liquidated  damages  are  not  used. 
It  seems  desirable,  on  the  whole,  that  the  Contractor  should  not  be  held 
liable  beyond  the  amount  of  the  certified  check.  The  provision  contained 
in  the  sample  form  which  follows,  provides  that  the  receipt  and  payment 
of  the  certified  check  shall  be  the  consideration  for  making  the  Proposal  and 
acceptance  in  other  respects  null  and  void,  so  that  there  can  then  be  no 
valid  claim  for  damages  for  breach  of  Contract.  It  is  quite  possible  that  a 
court  would  sustain  the  acceptance  and  payment  of  the  check  as  a  valid 
consideration  for  the  Contractor's  release  from  his  agreement  without  this 
specific  clause ;  it  is  probable  also  that  a  provision  for  liquidated  damages 
would  be  sustained,  but  the  question  of  its  forming  in  reality  a  penalty 
might  require  the  presentation  of  evidence  on  this  point. 

The  form  of  bid  or  Proposal,  as  a  sample,  may  be  as  follows : 


A.  Bid  or  Proposal 

To  the  Board  of  Sewer  Commissioners  of  the  City  of  Franktown,  Mass. 
For  the  Construction  of  Sewers,  the  bids  for  which  are  to  be  opened  March  10, 
1917. 

Made  this day  of 1917,  by l 


The  party  named  above  as  bidder,  declares  that  the  only  person  or  persons 
interested  in  this  bid  or  Proposal  as  principal  or  principals  is  or  are  named  above, 
and  that  no  other  person  than  hereinabove  named  has  any  interest  in  this  Pro- 
posal or  in  the  Contract  proposed  to  be  taken ;  that  this  bid  or  Proposal  is  made 
without  any  connection  with  any  other  person  or  persons  making  a  bid  or  Pro- 
posal for  the  same  purpose ;  that  the  bid  or  Proposal  is  in  all  respects  fair  and 
in  good  faith  and  without  collusion  or  fraud ;  and  that  no  City  officer  or  clerk, 
elected  or  appointed,  nor  any  person  in  the  employ  of  the  Board  of  Sewer  Com- 
missioners, is,  shall  be  or  become  directly  or  indirectly  interested  as  principal  or 
surety  in  this  Proposal  or  in  the  Contract  proposed  to  be  made,  or  in  the  supplies, 
work,  or  business  to  which  it  relates,  or  in  any  portion  of  the  profits  thereof. 

The  bidder  further  declares  that  he  is  not  in  arrears  to  the  Board,  or  to  the  City 
of  Franktown  upon  debt  or  Contract,  that  he  is  not  in  default  either  as  Contractor 
or  surety  or  otherwise  upon  any  obligation  to  said  Board  or  to  said  City,  and  that 
there  is  no  suit  or  claim  pending  as  to  such  arrears  or  default. 

He  further  declares  that  he  has  examined  the  site  of  the  work,  and  informed 

1  The  bidder's  name  and  address  must  be  inserted  here,  and  in  case  of  a  firm,  the  name 
and  address  of  each  and  every  member  of  the  firm  must  be  inserted.  In  case  of  a  bid  by  or  in 
behalf  of  any  corporation,  the  complete  legal  name  and  address  of  such  corporation  must  be 
written  here,  together  with  the  name  and  address  of  the  officer  or  agent  of  the  corporation  upon 
whom  notice  may  be  served. 


PROPOSAL  15-3 

himself  fully  in  regard  to  all  conditions  pertaining  to  the  place  where  the  work  is 
to  be  done ;  that  he  has  examined  the  form  of  Contract  and  of  Bond  on  file  in  the 
office  of  the  City  Engineer,  the  Specifications,  and  the  drawings  therein  referred 
to,  and  has  read  the  Information  for  Bidders  referring  to  the  work,  and  has  satis- 
fied himself  as  to  all  matters  relating  to  the  work  to  be  performed. 

The  bidder  proposes  and  agrees,  if  this  Proposal  shall  be  accepted,  that  he  will 
furnish  and  do  everything  required  by  the  Contract  to  which  this  refers,  for  the  fol- 
lowing stated  prices : 

(Here  follow  the  items  for  bids,  and  against  each  is  to  be  placed  the  bid  in  ink 
and  stated  both  in  words  and  in  figures.) 

For  all  extra  work  done  by  written  order  of  the  City  Engineer  not  similar  in 
character  to  the  items  above  specified,  and  for  which  no  price  is  set  in  the  said 
written  order,  its  actual  and  reasonable  direct  cost  to  the  Contractor,  as  deter- 
mined by  the  City  Engineer,  plus  15  per  cent  of  said  cost.  The  direct  cost  in  ad- 
dition to  materials  and  other  labor  furnished  by  the  Contractor  may  include  a 
reasonable  proportion  of  the  time  of  the  foreman  and  timekeeper,  together  with 
establishment  charges  and  insurance.  It  shall  not  include  any  charge  for  the  use 
of  tools,  or  for  time  spent  by  the  Contractor. 

If  this  Proposal  shall  be  accepted  by  the  Board,  the  bidder  agrees  to  execute 
and  deliver,  in  triplicate,  the  Contract  in  the  form  on  file  in  the  office  of  the  City 
Engineer,  and  for  the  prices  named  in  this  Proposal,  within  ten  days  (not  including 
Sundays  and  holidays)  from  the  date  when  a  written  notice  is  mailed  to  said  bidder 
at  the  address  herein  given,  stating  that  the  Contract  has  been  awarded  him  and 
is  ready  for  his  signature. 

The  bidder  also  agrees  that,  at  the  time  of  signing  the  Contract,  he  will  furnish 
and  deliver  a  Bond  in  the  form  on  file  with  the  City  Engineer  in  the  sum  of  thirty- 
five  thousand  dollars  ($35000)  with  a  surety  company  or  surety  companies  satis- 
factory to  the  Board,  as  surety. 

The  bidder  further  agrees  that  this  Proposal  shall  remain  in  force  until  the 
acceptance  of  this  or  some  other  Proposal  and  the  following  formal  execution  and 
delivery  of  the  Contract  and  the  furnishing  and  acceptance  of  the  Bond. 

Accompanying  this  Proposal  is  a  certified  check  payable  to  the  order  of  the 
Board  of  Sewer  Commissioners  of  the  City  of  Franktown  for  the  sum  of  four 
thousand  five  hundred  dollars  ($4500)  which  has  been  deposited  with  the  Board 
as  required. 

In  case  the  bidder  shall  fail  to  so  execute  and  deliver  the  Contract  and  furnish 
and  deliver  the  Bond  as  required  within  ten  days  as  stated,  then  the  Board  may, 
at  its  option,  consider  that  the  bidder  has  abandoned  his  Contract,  in  which  case 
the  certified  check  for  four  thousand  five  hundred  dollars  ($4500)  accompanying 
this  Proposal,  and  the  amount  thereof,  shall  become  the  property  of  the  Board, 
and  in  consideration  of  the  receipt  by  the  Board  of  said  certified  check,  and  the 
payment  thereof,  this  Proposal  and  its  acceptance  shall  become  in  other  respects  null 
and  void,  the  bidder  shall  be  released  from  other  damages,  and  the  Board  shall  be 
at  liberty  to  make  Contracts  with  other  parties  as  it  sees  fit.  But  if  the  bidder  shall 
execute  the  Contract,  and  give  Bond  as  required  within  the  time  aforesaid,  the 
certified  check  shall  be  returned  to  him  forthwith. 

The  bidder  in  connection  with  this  Proposal  and  as  part  of  it,  has  made  a  sworn 
statement  upon  the  form  provided,  as  to  what  work  he  has  done  of  a  similar  char- 
acter to  that  included  in  the  Contract  to  which  this  Proposal  refers,  and  has  given 


15-4  PROPOSAL 

references  from  which  the  Board  shall  determine  his  responsibility,  experience, 
skill,  and  business  standing. 


(Each  and  every  person  bidding  and  named  above  must  sign  above.  In  the  case  of  a 
firm  give  the  first  and  last  name  of  each  and  every  party  in  full,  with  residence. 

In  case  a  bid  shall  be  submitted  by  or  in  behalf  of  any  corporation,  it  must  be  signed  in 
the  full  legal  name  of  such  corporation  by  some  authorized  officer  or  agent  thereof,  who  shall 
also  subscribe  his  name  and  office  and  a  statement  that  he  acted  with  proper  authority. 
If  practicable,  the  seal  of  the  corporation  must  be  affixed.) 

NOTE. —  The  person,  or  all  persons  making  this  bid  must  swear  to  the  following  affidavit, 
and  in  case  of  a  corporation  this  affidavit  must  be  made  by  one  of  its  officers  as  an  individual. 

If  the  affidavit  is  made  out  of  the  County  of ,  a  certificate  must  be  attached 

showing  the  authority  of  the  official  before  whom  the  affidavit  was  made. 

B. 

State  of \ 

County  of J88 

being  duly 

sworn  says :  I  am l 

the  bidder  above  named.     I  have  read  the  foregoing  Proposal.    The  same  is  in 
all  respects  true. 

Subscribed  and  sworn  to  before  me  1 

this day  of 19.  .  J   


C.  In  case  of  a  corporation  the  affidavit  may  be  as  follows : 

State  of 

County  of 

(Name  of  officer) 

being  duly  sworn  says  that  he  signed  the  foregoing  Proposal  as  the  act  of  the 

Company  as  its ,  and  that  he  acted  with  proper 

authority  in  so  doing,  and  he  further  says  that  the  several  matters  stated  in  the 
above  Proposal  are  in  all  respects  true. 
Subscribed  and  sworn  to  before  me  1 
this day  of 19.  .  J 


D. 

State  of 1 

County  of / 

being  duly  sworn 

says  that  he  is* 

has  done  work  for  the  following  parties  of  the  kind  and  approximate  amount  shown : 
Party  Kind  of  Work  Total  Amount 


1  If  a  member  of  a  firm,  this  should  be  stated. 


PROPOSAL  15-5 

and  gives  the  following  as  references  as  to  his  responsibility,  experience,  skill  and 
business  standing : 


Subscribed  and  sworn  to  before  me  1 
this day  of 19..  J 


*  Is  a  member  of  the  firm  of 

and  that  said  firm 

or  Is  an  officer  of a  corporation, 

and  that  said  corporation 

E.  The  bidder  is  requested  to  state  below  the  name  and  address  of  the  surety 
company,  or  surety  companies,  offered  as  security  on  the  Bond  to  be  given  for  the 
faithful  performance  of  the  Contract ;  if  more  than  one  security  company  acts  as 
surety,  the  bidder  must  state  the  amount  in  which  each  will  qualify. 


In  one  form  in  use  the  bidder  is  "  required "  to  state  the  name  of  the 
surety  company  offered,  and  the  Information  for  Bidders  states  that : 

F.  Failure  to  name  sureties  will  be  sufficient  cause  for  the  rejection  of  a  pro- 
posal. 

With  this  is  provided  a  form  for  the  surety's  consent : 

G.  Surety  Company's  Consent 

Whereas,  bids  for  the  construction  of  sewers  are  to  be  opened  by  the  Board  of 
Sewer  Commissioners  of  the  City  of  Franktown,  Mass.,  on  March  10,  1917;   in 

case  the  Contract  for  construction  shall  be  awarded  to and  in 

consideration  of  such  award,  the   Surety  Company  consents 

and  agrees  that  it  will  become  bound,  as  surety  for  the  faithful  performance  of  said 
contract,  and  will  execute  a  Bond  in  the  sum  of  thirty-five  thousand  dollars  ($35,000) 
in  the  form  of  Bond  required  and  on  file  in  the  office  of  the  City  Engineer  of  Frank- 
town. 

Surety  Company. 

Name  of  officer. 

State  of.  . 


County 

On  this day  of 19 ,  before  me  personally  came 

to  me  known  and  known  to  me  to  be  the  same  person  described  in  and  who  executed 
the  foregoing  consent  for  and  in  behalf  of  the Surety  Company  and  he 


15-6  PROPOSAL 

acknowledged  to  me  that  he  acted  with  proper  authority  and  executed  the  same 
the  act  of  said  Surety  Company  and  for  the  purpose  therein  mentioned. 


Whatever  may  be  done  as  to  requiring  the  name  of  the  surety  and 
demanding  the  surety's  consent,  any  provision  as  to  these  should  not  be 
made  a  part  of  the  Proposal  to  such  an  extent  that  the  acceptance  of  the 
Proposal  can  possibly  be  construed  as  an  acceptance  of  the  surety.  It  is 
quite  possible  that  the  Proposal  may  be  acceptable  and  accepted,  but  that 
the  surety  first  offered  may  be  unacceptable,  so  that  there  ought  to  be 
opportunity  for  the  bidder  to  furnish  later  an  acceptable  surety.  The 
" request"  to  furnish  the  name  of  surety  would  often  be  complied  with  and 
action  accelerated  by  so  doing. 

The  following  provision  occurs  in  a  form  in  use : 

H.  It  is  understood  that  the  acceptance  of  this  Proposal  by  the  Commission 
shall  not  be  construed  as  an  approval  of  the  sureties  or  securities  named  in  this 
Proposal,  and  in  case  the  sureties  or  securities  named  in  this  Proposal  are  not  ap- 
proved by  the  Commission,  the  undersigned,  within  five  (5)  days  after  notice  of  dis- 
approval or  within  such  further  period,  if  any,  as  may  be  prescribed  by  the  Com- 
mission, shall  substitute  the  names  of  other  sureties  or  securities  approved  by  the 
Commission. 

Taking  up  the  features  of  the  Proposal,  for  the  first  clause  there  are 
various  alternative  forms  in  use  by  others  as  follows : 

7.  The  undersigned,  as  bidder,  declares  that  the  only  persons  or  parties  in- 
terested in  this  proposal  as  principals  are  named  on  page  . . .  that  this  proposal  is 
made  without  collusion  with  any  other  person,  firm  or  corporation. 

J.  The  undersigned  (hereinafter  called  the  Contractor)  hereby  declares  that 
the  only  persons  interested  in  this  bid  as  principals  are  named  herein;  that  no 

person  acting  for,  or  employed  by,  the  City  of is  directly  or  indirectly 

interested  in  this  bid,  or  in  any  contract  which  may  be  made  under  it,  or  in  expected 
profits  to  arise  therefrom ;  and  that  this  bid  is  made  in  good  faith  without  fraud  or 
collusion  with  any  other  bidder  bidding  for  this  contract. 

K.  The  undersigned  also  hereby  declares  that  he  is  the  only  person  interested 
in  this  proposal ;  that  it  is  made  without  any  connection  with  any  other  person 
making  any  bid  for  the  same  work;  that  no  person  acting  for,  or  employed  by, 

the  City  of  is  directly  or  indirectly  interested  in  this  proposal,  or  in 

any  contract  which  may  be  made  under  it,  or  in  expected  profits  to  arise  therefrom ; 
and  that  this  proposal  is  made  in  good  faith,  without  collusion  or  connection  with 
any  other  person  bidding  for  the  same  work ;  and  that  this  proposal  is  made  with 
distinct  reference  and  relation  to  the  plans,  drawings  and  specifications  prepared 
for  this  case,  and  herein  mentioned. 

L.  He  further  states  that  he  has  not  directly  or  indirectly  entered  into  any 
combination,  collusion,  undertaking  or  agreement  with  any  other  bidder  or  bidders 


PROPOSAL  15-7 

to  maintain  the  price  of  any  contract  or  work,  or  to  prevent  any  bidder  or  bidders 
from  submitting  proposals,  or  to  induce  any  bidder  or  bidders  to  refrain  from  sub- 
mitting proposals  on  any  contract  or  work,  and  that  said  proposal  so  made  is  with- 
out reference  or  regard  to  any  other  proposal  or  proposals,  and  without  agreement, 
understanding  or  combination,  either  directly  or  indirectly,  with  any  other  person 
or  persons  with  reference  to  such  bidding  in  any  way  or  manner  whatsoever. 

M.  This  Proposal  is  made  without  any  connection  with  any  other  person  mak- 
ing a  proposal  or  bid  for  the  same  purpose  and  is  in  all  respects  fair  and  without 
collusion  or  fraud.  No  member  of  the  Board  of  Aldermen,  head  of  department, 
chief  of  bureau,  deputy  thereof  or  clerk  therein  or  other  officer  of  the  City  or  any 
member  or  employee  of  the  Board  is  interested  directly  or  indirectly,  as  contract- 
ing party,  partner,  stockholder  or  otherwise,  in  or  in  the  performance  of  the  con- 
tract or  in  the  supplies,  work  or  business  to  which  it  relates  or  in  any  portion  of 
the  profits  thereof. 

N.  That  there  are  no  persons  interested  with  the  undersigned  in  this  proposal, 
except 1  

The  provision  in  the  second  paragraph  of  the  sample  form  as  to  default 
and  arrears  is  somewhat  unusual,  and  the  question  of  fact  as  to  arrears  may 
sometimes  offer  difficulty.  The  statement  that  there  is  no  suit  or  claim 
pending  tends  to  cure  that  difficulty.  The  City  or  other  principal  is  justi- 
fied in  not  entering  into  a  Contract  if  its  relations  with  the  Contractor  are 
such  that  a  controversy  is  probable. 

The  provision  contained  in  the  third  paragraph  includes  the  Proposal 
as  to  prices  and  differs  somewhat  in  different  forms  as  appears  below : 

0.  The  undersigned  hereby  declares  that  he  has  carefully  examined  the  an- 
nexed form  of  contract  and  specifications,  the  plans  therein  referred  to,  and  also 
the  site  upon  which  the  projected  work  is  to  be  performed,  and  will  provide  all 
necessary  machinery,  tools,  apparatus  and  other  means  of  construction,  and  do 
all  the  work  and  furnish  all  the  materials  called  for  by  said  contract  and  speci- 
fications, in  the  manner  and  on  the  terms  and  conditions  therein  set  forth,  and  ob- 
serve and  perform  all  the  covenants  in  said  contract  contained,  for  the  following 
sums: 

P.  The  undersigned  hereby  declares  that  he  has  carefully  examined  the  an- 
nexed form  of  contract  and  specifications,  and  the  drawings  therein  referred  to, 
and  will  provide  all  the  necessary  machinery,  tools,  apparatus,  and  other  means 
of  construction,  and  do  all  the  work  and  furnish  all  the  materials  (called  for  by 
said  contract  and  specifications)  in  the  manner  prescribed  in  the  contract  and 
specifications,  and  requirements  under  them  of  the  Engineer,  for  the  following  sums, 
to  wit: 

Q.  That  he  has  carefully  examined  the  annexed  form  of  contract  and  speci- 
fications, and  the  drawings  therein  referred  to ;  that  he  has  informed  himself  fully 
in  regard  to  all  conditions  pertaining  to  the  place  where  the  work  is  to  be  done, 
and  has  carefully  estimated  on  the  work ;  and  he  hereby  bids,  in  accordance  with 

1  The  except  will  be  crossed  out  if  no  other  person  is  interested. 


15-8  PROPOSAL 

the  Information  for  Bidders,  to  provide  all  necessary  machinery,  tools,  apparatus 
and  other  means  for  construction,  and  to  do  all  the  work  and  furnish  all  the  ma- 
terial called  for  by  said  contract  and  specifications,  in  the  manner  and  time  therein 
prescribed  and  according  to  the  requirements  of  the  Board,  including  all  incidental 
work,  for  the  following  sums,  to  wit : 

R.  That  he  has  carefully  examined  the  location  of  the  proposed  work,  the  an- 
nexed proposed  form  of  contract,  and  the  plans  therein  referred  to ;  and  he  proposes, 
and  agrees  if  this  proposal  is  accepted,  that  he  will  contract  with  the  Board,  in  the 
form  of  the  copy  of  the  contract  deposited  in  the  office  of  the  City  Engineer,  to  pro- 
vide all  necessary  machinery,  tools,  apparatus  and  other  means  of  construction 
and  to  do  all  the  work  and  furnish  all  the  materials  specified  in  the  contract,  in 
the  manner  and  time  therein  prescribed,  and  according  to  the  requirements  of  the 
Engineer  as  therein  set  forth,  and  that  he  will  take  in  full  payment  therefor  the 
sum  of ($ ). 

S.  To  furnish  all  necessary  labor,  materials,  plant,  power,  light,  heat,  water,  tools, 
supplies  and  other  means  of  construction  and  perform  all  the  work  mentioned  in 
the  said  contract  at  the  prices  for  the  several  items  as  given  in  the  following  Schedule: 

T.  The  undersigned  has  also  read  and  considered  the  foregoing  "  Require- 
ments for  Bidding  and  Instructions  to  Bidders,"  and  proposes  to  furnish  all 
the  materials  and  to  do  all  the  work  called  for  on  said  plans  and  in  said  specifica- 
tions for  the  furnishing,  fabrication  and  delivery  of  all  metal  work  for  the  super- 
structure of  said  bridge,  and  to  furnish  all  materials,  tools,  labor  and  all  appliances 
and  appurtenances  necessary  to  the  full  completion  of  the  same,  at  the  rates  and 
prices  for  said  work,  as  follows,  to-wit : 

The  sample  form  uses  the  expression  "furnish  and  do  everything  re- 
quired by  the  Contract  to  which  this  refers."  The  Proposal  is  in  part  to 
sign  the  Contract,  and  the  detail  of  the  words  necessary  need  appear  only 
in  the  Contract,  and  should  appear  fully  there. 

The  word  "prices"  seems  more  appropriate  than  "sums"  where  unit 
prices  are  stated ;  sometimes  the  words  "unit  prices"  are  used.  Where  a 
lump  sum  is  bid  the  word  "sum"  seems  more  fitting  than  "price,"  although 
the  latter  is  entirely  appropriate. 

The  provision  for  extra  work  has  sometimes  been  in  one  of  the  following 
forms : 

U.  For  extra  work  or  materials,  if  any,  as  specified  under  Article  . . .  the 
reasonable  cost  of  the  work  or  materials,  as  agreed  or  as  determined  by  the  En- 
gineer, plus  ten  (10)  per  cent  of  such  cost. 

V.  For  extra  work,  if  any,  performed  in  accordance  with  Article  ...  of  the 
annexed  form  of  contract,  the  reasonable  cost  of  the  work  as  determined  by  the 
Engineer,  whose  determination  shall  be  final,  plus  15  per  cent  of  such  cost. 

W.  For  all  extra  work  done  by  written  order  of  the  Engineer  not  similar  in  char- 
acter to  the  items  above  specified,  and  for  which  no  price  is  set  in  the  said  written 
order,  its  actual  and  reasonable  cost  to  the  Contractor,  as  determined  by  the 
Engineer,  plus  15  per  cent  of  said  cost. 


PROPOSAL  15-9 

The  provision  as  to  extra  work  is  lacking  in  most  Proposals,  and  if  it  does 
appear  in  the  Contract  the  lack  is  not  of  great  importance.  Where  com- 
petitive bidding  is  required,  the  inclusion  of  this  clause  makes  the  Proposal 
more  complete  in  itself,  and  some  courts  might  consider  it  desirable  or 
even  necessary.  The  chapter  on  Uniform  Contract  Form  shows  a  section 
providing  for  extra  work. 

In  the  Proposal  it  is  not  uncommon  to  find  some  such  provision  as  the 
following : 

X.  It  is  understood  that  the  quantities  of  various  items  specified  in  the  fol- 
lowing Schedule  are  approximate  only  and  are  given  as  a  basis  for  the  uniform  com- 
parison of  bids  and  are  not  in  any  way  guaranteed  or  represented  as  correct  or 
intended  to  be  relied  upon,  and  they  shall  not  be  taken  as  final  and  shall  form  no 
basis  for  any  claim  in  case  they  do  not  correspond  with  the  final  measurements  or 
quantities.  It  is  further  understood  that  the  Commission  reserves  the  right  to 
increase  or  to  diminish  or  to  omit  entirely  any  of  the  quantities  of  items  as  therein 
stated. 

This  seems  unnecessary  in  the  Proposal.  The  Proposal  necessarily 
refers  to  the  formal  Contract.  The  bidder  states  that  he  has  examined 
the  form  of  Contract,  and  agrees  to  execute  it ;  the  Contract  should  include 
such  a  provision ;  it  is  not  necessary  that  the  Proposal  should  do  so.  In 
the  form  shown  above  it  is  equivalent  to  an  agreement  that  no  claim  shall 
be  made.  It  is  essentially  a  Contract  provision. 

The  clause  touching  the  surrender  of  the  certified  check  usually  differs 
somewhat  from  that»shown  in  the  sample  Proposal,  as  appears  below: 

Y.  If  this  proposal  shall  be  accepted  by  the  Board  of  Water  Commissioners, 
and  the  undersigned  shall  fail  to  contract  as  aforesaid,  and  to  give  bond  in  the  sum 
of  forty  thousand  dollars  ($40,000),  with  surety  or  sureties  satisfactory  to  the  Board, 
within  ten  days  from  the  date  of  the  award  of  this  contract,  then  he  shall  be  con- 
sidered to  have  abandoned  it,  and  the  certified  check  for  five  thousand  dollars 
($5000)  accompanying  this  proposal  shall  be  forfeited  to,  and  become  the  property 

of  the  Board  of  Water  Commissioners  of  the   City   of ;   otherwise 

the  accompanying  check  shall  be  returned  to  the  undersigned. 

Z.  If  this  proposal  shall  be  accepted  by  the  Board,  and  the  undersigned  shall 
fail  to  contract  as  aforesaid,  and  to  give  bond  in  the  sum  of  one  thousand  two 
hundred  fifty  dollars  ($1,250)  with  surety  or  sureties  satisfactory  to  the  Board, 
within  six  days  (not  including  Sunday)  from  the  date  of  the  mailing  of  a  notice 
from  the  Commission  to  him,  according  to  the  address  herewith  given,  that  the  con- 
tract is  ready  for  signature,  then  the  Board  may  at  its  option  determine  that  the 
bidder  has  abandoned  the  contract,  and  thereupon  the  proposal  and  acceptance 
shall  be  null  and  void,  and  the  certified  check  for  one  hundred  twenty-five  dollars 
($125)  accompanying  this  proposal  shall  become  the  property  of  the  City ;  other- 
wise the  accompanying  check  shall  be  returned  to  the  undersigned. 

a.  Accompanying  this  proposal  is  a  certified  check  payable  to  the  City  for 
two  hundred  and  fifty  dollars  ($250)  which  it  is  agreed  shall  become  the  property 


15-10  PROPOSAL 

of  the  City  if,  in  case  this  proposal  is  accepted  by  the  Board,  the  undersigned  shall 
fail  to  execute  the  contract  with  said  Board  under  the  conditions  of  this  proposal, 
within  the  time  provided  for  by  the  notice  to  contractors ;  otherwise  said  check 
shall  be  returned  to  the  undersigned. 

b.  Accompanying  this  proposal  is  a  certified  check  for  one  thousand  dollars 
($1,000),  which  shall  become  the  property  of  the  City,  if,  in  case  this  proposal 
shall  be  accepted  by  the  Board,  the  undersigned  shall  fail  to  execute  a  contract 
with,  and  give  bond  to,  said  City,  according  to  the  requirements  of  the  Informa- 
tion for  Bidders,  within  the  time  provided  for  by  the  said  notice,  said  check  to  be 
given  and  received  as  full  consideration  and  compensation  to  the  City  for  all  loss, 
delay  and  damage  caused  to  it  by  said  failure  of  the  undersigned.    If,  however, 
the  contract  and  bond  are  executed  and  delivered  according  to  the  requirements  of 
the  said  notice,  the  said  check  shall  be  returned  to  the  undersigned. 

c.  If  this  proposal  shall  be  accepted  by  the  Commissioners  of  Sewerage,  and 
the  undersigned  shall  fail  to  contract  as  aforesaid  and  give  a  bond  in  the  sum  of 
thousand  dollars  ($ )  with  surety  satisfactory  to  the  Com- 
missioners of  Sewerage,  within  ten  days  (not  including  Sundays  and  legal  holidays) 
from  the  date  of  the  mailing  of  a  notice  from  the  Commissioners  of  Sewerage  to 
him,  according  to  the  address  herewith  given,  that  the  contract  is  ready  for  sig- 
nature, then  the  Commissioners  of  Sewerage  may,  at  their  option,  determine  that 
the  undersigned  has  abandoned  the  contract,  and  thereupon  the  proposal  and 

acceptance  shall  be  null  and  void,  and  the  certified  check  for dollars 

accompanying  said  proposal  shall  become  the  absolute  property  of  the  Commis- 
sioners of  Sewerage  to  reimburse  them  for  any  expense  or  delay  which  they  may 
incur,  and  to  indemnify  them  for  any  loss  or  damge  which  they  may  sustain  by  the 
failure  of  the  undersigned  to  execute  contract  and  furnish  bond  as  aforesaid ;  and 
it  is  now  agreed  by  the  undersigned  that  said  check  and  the  amount  thereof  may  be 
collected  and  retained  by  said  Commissioners  as  liquidated  damages  should  he 
fail,  after  said  award,  to  execute  the  contract  or  furnish  bond  in  accordance  with 
the  terms  of  this  proposal. 

d.  And  also  agrees  that  the  certified  check,  payable  to  the  City,  and  the  amount 
thereof  is  the  amount  of  the  damages  which  the  City  will  sustain  by  failure  to  carry 
out  the  proposal,  but  if  this  proposal  is  not  accepted,  or  if  notice  is  mailed  or  de- 
livered and  the  undersigned  executes  and  delivers  said  contract  and  bond  as  afore- 
said, the  check,  or  its  amount,  is  to  be  paid  to  him  on  receipt  therefor. 

6.  It  is  hereby  agreed  that  in  the  event  that  the  undersigned  is  awarded  the 
contract  for  the  work  herein  mentioned,  and  shall  fail  or  refuse  to  execute  a  con- 
tract for  the  work  so  awarded  and  to  furnish  the  specified  bond  within  seven  (7) 
days  after  receiving  notice  of  the  award  of  the  said  contract  to  the  undersigned, 
then,  in  that  case,  the  said  sum  deposited  with  this  proposal  shall  be  retained  by  the 
Board  as  liquidated  damages  and  not  as  a  forfeiture,  IT  BEING  NOW  AGREED 
that  said  sum  of  THREE  HUNDRED  DOLLARS  ($300.00)  deposited  with  this 
proposal  for  the  work  so  awarded  is  the  fair  measure  of  the  amount  of  damages 
that  The  Board  will  sustain  in  case  the  undersigned  shall  fail  or  refuse  to  enter 
into  the  contract  so  awarded,  and  to  furnish  bond,  as  specified  in  said  contract. 

Attention  should  be  called  to  the  fact  that,  in  the  above  alternative 
readings,  there  is  not  an  express  agreement  to  execute  the  Contract  and 


PROPOSAL  15-11 

give  Bond,  nor  to  execute  the  Contract  "for  the  prices  named."  A  lack 
as  to  these  features  leads  to  a  failure  in  some  degree  for  the  acceptance  of 
the  Proposal  to  constitute  a  complete  agreement  on  these  points,  an  agree- 
ment for  whose  breach  a  suit  for  damages  could  be  successfully  main- 
tained. The  alternative  form,  "if  the  bidder  fails"  etc.,  leads  to  a 
provision  for  the  payment  of  the  certified  check  as  liquidated  damages  or 
otherwise,  but  the  surrender  of  the  check  as  consideration  for  making  the 
contract  null  and  void  otherwise,  as  in  the  sample  form,  seems  more  direct 
and  complete  and  less  liable  to  attack. 

Attention  is  especially  called  to  the  fact  that  the  bidder,  in  the  sample 
Proposal,  agrees  to  execute  the  Contract,  and  to  furnish  the  Bond,  in  both 
cases  "in  the  form  on  file  in  the  office  of  the  City  Engineer."  This  makes 
the  agreement  definite  and  leaves  no  chance  for  misunderstanding  as  to  the 
form  of  these  documents. 

A  clause  in  use  provides  specifically  that  the  acceptance  of  the  Proposal 
shall  operate  as  appears  below : 

/.  A  notice  that  this  Proposal  has  been  accepted  addressed  to  the  undersigned 
by  the  Board  as  aforesaid  shall  forthwith,  at  the  option  of  the  Board,  operate  as 
against  the  undersigned  as  a  complete  making  of  a  Contract  according  to  the  form 
thereof  as  aforesaid,  with  the  blanks  therein  contained  filled  in  according  to  this 
Proposal. 

This  appears  to  be  simply  a  re-affirmation  of  the  Common  Law  which 
is  hardly  subject  to  question.  Some  engineers  may  prefer  to  include  it. 

In  the  following  form  there  is  an  express  provision  by  the  bidder  which 
is  also  in  an  excellent  form  generally : 

g.  If  this  Proposal  is  accepted  and  the  proposed  contract  consented  to  by  the 
Board,  the  undersigned  will  within  three  (3)  days  after  the  delivery  of  notice  at- 
tend at  the  office  of  the  Board,  in  person  or  by  duly  authorized  representative,  and 
will  then  and  there  deliver  the  contract  with  the  City  in  the  form  aforesaid  duly 
executed  and  with  its  execution  duly  proved;  and  the  undersigned  will  at  the 
same  time  deliver  to  the  Comptroller  of  the  City  pursuant  to  the  terms  of  said 
contract  a  bond  in  the  sum  of  forty  thousand  dollars  ($40,000)  in  the  form  annexed 
hereto  and  made  a  part  hereof,  with  the  following  named  sureties  or,  in  the  event  that  the 
following  named  sureties  or  any  of  them  shall  not  be  approved  by  the  Board,  with  such 
other  sureties  as  the  Board  shall  approve. 

The  following  form  provides  that  the  bidder  shall  pay  full  damages  if 
he  fails  to  sign  the  contract  and  to  give  Bond  as  required.  The  certified 
check  furnishes  security,  not  always  sufficient,  but  the  bidder  commonly 
has  some  financial  responsibility  in  addition  to  this.  Most  Contractors, 
in  bidding,  prefer  to  know  the  maximum  liability  incurred  in  bidding. 

h.  At  the  time  of  delivering  this  Proposal  to  the  Board  the  undersigned  will 
separately  deliver  a  certified  check  payable  to  the  order  of  the  City  for  the  sum  of 


15-12  PROPOSAL 

ten  thousand  dollars  ($10,000).  And  the  undersigned  hereby  assigns  to  the  City 
the  said  sum  so  specially  deposited  by  the  delivery  of  such  certified  check  as  se- 
curity for  the  performance  of  the  obligations  of  the  undersigned  under  this  Pro- 
posal. It  is  understood  that  such  check  is  to  be  returned  to  the  undersigned  when 
the  contract  for  the  construction  of  the  station  finish  for  said  Sections  Nos.  7  to  11, 
inclusive,  of  Route  No.  5,  is  executed  and  its  provisions  in  respect  of  the  bond  or 
deposit  are  complied  with,  unless  all  the  proposals  submitted  in  response  to  said 
Invitation  to  Contractors  shall  be  rejected  by  the  Board,  and  in  that  case  when 
such  proposals  are  rejected,  as  provided  in  the  Information  for  Contractors.  In 
case  the  undersigned  shall  default  in  the  performance  of  any  of  the  obligations  of 
the  undersigned  under  this  Proposal,  the  City  shall  have  the  right  to  apply  the 
amount  so  specially  deposited  or  so  much  thereof  as  may  be  necessary  as  a  pay- 
ment on  account  of  the  damages  sustained  by  the  City  by  reason  of  such  default 
as  aforesaid  and  shall  return  the  balance,  if  any,  to  the  undersigned.  If  the  amount 
of  such  damages  shall  exceed  the  amount  of  said  sum  so  specially  deposited,  the 
undersigned  shall  promptly  upon  demand  from  the  Board  pay  the  amount  of  such 
excess  to  the  City. 

Whatever  the  form  used,  it  is  essential  that  the  notice  be  given  in  the 
words  specified,  and  that  there  be  adequate  evidence  as  to  such  notice. 
In  the  sample  form  provision  is  made  for  signing  "  within  ten  days  from  the 
date  when  a  written  notice  is  mailed  to  said  bidder  at  the  address  herein 
given,  stating  that  the  Contract  has  been  awarded  him  and  is  ready  for  his 
signature."  Time  is  sometimes  saved  by  a  verbal  notice,  but  even  then 
the  formal  notice  should  be  sent,  and  the  specified  words  used.  This 
written  notice  should  not  be  tossed  into  the  general  mail,  and  should  not  be 
intrusted  to  the  office  boy.  Some  responsible  person  should  deposit  it  in 
the  post  office  or  in  a  mail  box  and  be  ready  to  testify  to  that  fact.  Since 
large  sums  of  money  are  often  involved,  it  is  also  worth  while  to  have  an 
additional  witness  who  has  seen  the  notice  enclosed  in  the  envelope  and 
afterwards  mailed. 

The  sample  form  also  contains  a  provision  that  the  Proposal  shall 
remain  in  force  until  the  Contract  has  been  awarded  and  executed  and  the 
Bond  furnished.  This  seems  more  nearly  adequate  than  a  clause  in  the 
Information  for  Bidders  that  no  bid  may  be  withdrawn  after  it  has  been 
deposited.  Another  excellent  reading  is  shown  below  : 

i.  The  undersigned  hereby  accepts  the  invitation  of  said  Board  to  submit  a 
proposal  on  said  work  on  the  express  understanding  that  he  will  not  withdraw  this 
proposal  or  cause  the  same  to  be  withdrawn,  and  that  the  Board  will  hold  this 
proposal  and  the  sum  deposited  herewith  until  all  of  the  proposals  submitted  have 
been  canvassed  and  a  contract  for  said  work  has  been  awarded  and  signed  and 
the  specified  bond  furnished  and  approved. 

Some  forms  provide  that  a  surety  Bond  shall  be  furnished  instead  of  the 
certified  check,  and  a  form  of  Bond  for  this  purpose  may  be  found  in  the 
chapter  on  Bond. 


PROPOSAL  15-13 

OPENING  OF  THE  BIDS 

At  the  specified  time  the  bids  should  be  publicly  opened  and  read  aloud, 
so  that  bidders  present,  or  their  agents,  may  have  adequate  knowledge  of 
all  the  bids.  The  bids  should  preferably  be  opened  by  a  member  of  the 
Board.  In  large  cities  the  official  in  charge  of  the  letting  may  be  a  single 
Commissioner  of  Public  Works,  or  some  similar  official,  who  has  no  time 
available  for  such  purposes.  It  is  customary  in  such  a  case  for  the  Chief 
Clerk  to  perform  this  function  of  opening  the  bids. 

The  bids  are  then  taken  under  advisement  for  comparison  and  determi- 
nation, and  reasonable  time  is  allowable  for  such  purposes.  The  amounts 
must  be  carried  out  and  summed  up,  and  the  qualifications  of  the  bidder 
as  a  Contractor  must  be  passed  upon. 

AWARD 

Then  follows  the  "award,"  and  the  action  of  the  Board  may  or  may  not 
be  controlled  by  statute  or  by  ordinance.  There  are  many  public  Boards 
that  are  not  required  to  advertise  and  are  not  restricted  as  to  the  award. 
For  railroad  or  other  private  work  there  are  usually  no  restrictions  either 
as  to  Advertisement  or  award. 

When  the  mode  of  contracting  is  prescribed  and  limited  by  charter  or 
ordinance,  this  must  be  definitely  pursued  or  the  Contract  will  not  bind  the 
municipality.  Where  such  mode  is  prescribed,  the  municipality  has  no 
power  to  proceed  otherwise,  and  the  making  of  a  Contract  is  ultra  vires  and 
invalid  if  made  in  any  other  way.  Ratification  of  any  such  action  may  be 
made  only  by  the  proper  authority.  The  legislature  may  not  ratify  action 
contrary  to  the  Constitution ;  the  municipal  Council  may  not  ratify  acts 
contrary  to  the  charter,  but  may  ratify  acts  where  municipal  ordinances 
only  have  been  transgressed. 

Where  competitive  bidding  is  required,  the  steps  taken  must  be  such  as 
in  good  faith  to  invite  competition.  Competition  may  be  dispensed  with 
in  certain  cases  of  emergency,  monopoly  or  exclusive  right,  patented  inven- 
tions, proprietary  articles,  where  professional  skill  is  involved,  or  where 
selection  is  made  on  tests.  The  action  even  here  must  be  in  good  faith. 

Statutes  as  to  advertising  and  statutes  prescribing  methods  of  opening 
bids  are  mandatory,  and  are  for  the  protection  of  the  tax  paying  public. 
The  acceptance  of  a  bid  where  all  mandatory  requirements  have  not  been 
observed,  does  not  (cannot)  make  a  valid  Contract.  Statute  requirements 
as  to  hours  of  labor,  employment  of  union  labor,  and  the  like  have  in  some 
cases  been  held  to  be  unconstitutional,  giving  a  citizen  a  right  to  enjoin 
if  he  takes  prompt  action  before  the  Contract  is  entered  into.  The  advice 


15—14  PROPOSAL 

of  a  practicing  attorney  is  indicated  when  such  requirements  apparently 
must  be  complied  with. 

Where  a  statute  or  ordinance  requires  letting  to  the  lowest  bidder,  no 
award  to  any  other  is  allowable.  All  bids,  however,  may  be  rejected. 
When  the  lowest  bidder  has  failed  to  enter  into  the  Contract  it  sometimes 
has  been  held  that  the  Contract  might  be  awarded  to  the  next  lowest  bidder 
without  re-advertising,  but  the  next  lowest  bidder  cannot  compel  such 
action.  The  provision  for  letting  to  the  lowest  bidder  is  not  for  his  benefit, 
but  to  protect  the  tax  payers,  and  the  lowest  bidder  has  no  "right"  to  the 
acceptance  of  his  bid.  The  law,  however,  is  not  uniform  in  all  States,  as 
to  the  right  to  award  to  the  next  lowest  bidder  in  case  the  lowest  bidder  fails 
to  execute  the  Contract  and  file  the  Bond.  Some  courts  have  held  that  the 
certified  check  or  Bond  is  a  sufficient  protection  to  the  taxpayer.  In  some 
States,  the  courts  hold  re-letting  to  be  necessary.  Where  an  award  has 
been  made  to  the  lowest  bidder  under  a  requirement  to  do  so  and  he  has 
failed  to  comply  with  the  conditions  imposed  by  his  Proposal,  he  should 
have  opportunity  to  be  heard  before  an  award  is  made  to  the  next  lowest 
bidder. 

Unless  the  lowest  bidder  is  specified  and  required,  or  where  provision  is 
made  for  letting  to  the  "lowest  responsible  bidder,"  or  to  the  "lowest  and 
best  bidder,"  the  courts  have  usually  held  it  to  confer  discretionary  powers 
upon  the  public  officers  to  determine  the  responsibility  of  the  bidder  and  the 
acceptability  of  his  surety ;  the  action  of  such  officials  has  a  judicial  char- 
acter, and  consideration  may  be  given  to  financial  responsibility  and  to 
the  skill,  ability,  and  integrity  required.  The  official,  however,  cannot 
exercise  his  discretion  arbitrarily  and  without  reason.  While  arbitrary 
determination  is  not  allowable,  the  courts  are  slow  to  interfere  with  the 
action  of  officials  in  their  discretion,  and  although  the  acts  and  require- 
ments of  a  Board  of  Public  Works  are  subject  to  review  by  the  courts, 
nevertheless,  the  acts  being  discretionary,  the  courts  do  not  interfere  unless 
the  motive  is  fraudulent  or  does  positive  injury ;  they  sometimes  tolerate 
restrictions  and  requirements  for  which  no  just  cause  has  been  assigned 
and  which  are  frequently  burdensome  to  bidders. 

It  is  further  true  that  no  public  officer  is  responsible  in  a  civil  suit  where 
his  acts  have  been  judicial  or  discretionary,  however  erroneous ;  but  the 
wilful  award  of  a  Contract  by  a  city  official,  wrongfully  and  with  evil 
intent,  is  a  criminal  offence  and  may  lead  to  indictment,  although  in  practice 
it  is  difficult  to  pursue  such  a  case  to  a  satisfactory  conclusion. 

Not  only  is  it  necessary  that  the  Proposals  should  one  and  all  be  made 
upon  precisely  the  same  data  and  with  the  same  means  offered  to  all,  but 
it  is  also  requisite  that  the  Contract  should  be  executed  in  the  form,  under 
the  same  terms,  and  according  to  the  plans  and  Specifications  upon  which  the 


PROPOSAL  15—15 

bid  was  made ;  the  bidder  should  insist  on  this.  If  there  is  a  change,  there 
is  not  a  compliance  with  the  statute  requirements.  The  provisions  of  the 
Contract  that  the  City  Engineer  or  Chief  Engineer  may  make  changes  are 
all  right  provided  these  do  not  materially  change  the  character  and  cost. 
Extra  work  also  is  legally  limited  to  such  reasonable  small  amounts  as  are 
necessary  to  the  Contract.  Intent  and  good  faith  are  the  important  ele- 
ments where  any  controversy  arises  on  these  points;  ordinarily  the  evi- 
dence would  need  to  be  strong  to  disturb  acts  in  the  discretion  of  the  En- 
gineer. Cases  are  not  altogether  rare,  however,  where  this  has  been  done. 


CHAPTER  XVI 

UNIFORM  CONTRACT  FORM 

A  valid  Contract  exists  provided  only  that  the  four  essentials  are 
present : 

1.  Mutual  assent  to  the  terms  of  the  agreement. 

2.  Competent  parties. 

3.  A  valid  consideration,  actual  or  presumed. 

4.  Definite  and  lawful  subject  matter  to  be  acted  upon. 

This  chapter  deals  with  the  subject  matter.  While  it  is  true  that  a 
Contract  exists  provided  only  that  these  four  essentials  are  present,  it  is 
yet  necessary,  when  something  is  to  be  done,  that  the  terms  should  be 
sufficiently  explicit  so  that  exactly  what  is  wanted  is  properly  set  forth. 
Experience  has  established  many  points  necessary  to  be  covered  in  Con- 
tracts for  public  work  or  other  work  of  a  similar  character.  This  chapter 
will  be  devoted  to  a  consideration  of  those  provisions  covering  the  sub- 
ject matter  which  have  been  found  essential  or  desirable  in  such  work, 
so  that  there  results  not  only  a  Contract,  but  a  well  drawn  Contract. 

In  such  work,  the  written  description  of  what  is  to  be  done  is  divided 
into  two  parts,  the  Contract  proper  and  the  Specifications.  The  Contract 
very  commonly  refers  to  the  Specifications  "  which  are  hereby  made  a 
part  of  this  Contract,"  and  the  Specifications  in  turn  are  supplemented 
by  plans  or  drawings  "  which  are  hereby  made  a  part  of  these  Specifica- 
tions." 

The  Contract  proper  should  cover  the  agreement  and  such  parts  of  the 
work  to  be  done  as  are  general  in  character  and  applicable  to  almost  any 
work,  without  close  reference  to  its  immediate  character.  The  Specifica- 
tions, as  the  name  suggests,  should  specify  the  materials,  workmanship  and 
methods  necessary  to  secure  satisfactory  work  of  any  special  sort,  and 
strictly  should  not  include  any  clauses  of  agreements. 

It  is  sometimes  found  difficult  to  observe  a  clear  line  of  demarcation 
between  Contract  and  Specifications.  As  an  outcome,  it  is  not  uncommon 
for  the  Specifications  to  be  included  within  the  body  of  the  Contract, 
so  that  the  signatures  are  subscribed  at  the  bottom  of  the  document  of 

16—1 


16-2  UNIFORM  CONTRACT  FORM 

which  the  Specifications  form  a  part.  On  the  contrary,  it  is  also  common 
to  have  the  Contract  a  shorter  document  which  refers  to  the  Specifications 
as  a  part  of  the  Contract,  although  these  are  not  bodily  included  within 
its  limits.  In  the  case  of  most  public  work,  the  forms  of  Instructions  to 
Bidders,  Proposal,  Bond,  Contract,  and  Specifications  are  printed  and 
bound  together  in  a  pamphlet  or  booklet  where  all  may  conveniently  be 
read  and  considered  together. 

There  is  very  little  choice  as  to  which  method  should  be  adopted. 
Since  it  is  very  difficult  to  separate  completely  Contract  agreements  from 
Specifications,  there  seems  to  be  some  theoretical  advantage  in  having 
the  Specifications  included  in  the  body  of  the  Contract.  On  the  other 
hand,  there  is  a  practical  advantage,  sometimes,  in  having  a  general  Con- 
tract Form  in  print,  and  then  referring  to  Specifications  for  each  class  of 
work,  with  a  statement  that  these  Specifications  are  made  a  part  of  the 
Contract.  As  a  matter  of  experience,  it  is  not  apparent  that  any  vital 
fault  exists  in  well  written  Contracts  in  either  form. 

The  American  Railway  Engineering  Association  has  seen  fit  to  keep 
the  Specifications  separate  and  has  provided  a  general  "  Uniform  Contract 
Form  "  which  contains  very  much  that  is  commendable,  and  which  is 
favorably  regarded  by  the  surety  companies  and  by  many  Contractors. 
This  form,  the  one  in  use  in  1917,  is  shown  below  as  a  standard  or  basis 
for  discussion. 

AGREEMENT  FORM 

(Copyright,  by  American  Railway  Engineering  Association,  900  South  Michigan  Avenue, 
Chicago,  111.,  March,  1913). 


THIS  AGREEMENT,  made  this day  of 

in  the  year by  and  between 


party  of  the  first  part,  hereinafter  called  the  Contractor,  and . 


party  of  the  second  part,  hereinafter  called  the  Company. 

WITNESSETH,  That,  in  consideration  of  the  covenants  and  agreements 
hereinafter  mentioned,  to  be  performed  by  the  parties  hereto  and  of  the  pay- 
ments hereinafter  agreed  to  be  made,  it  is  mutually  agreed  as  follows : 

The  Contractor  shall  furnish  all  the  materials,  superintendence,  labor,  equip- 
ment and  transportation,  except  as  hereinafter  specified,  and  shall  execute, 
construct  and  finish,  in  an  expeditious,  substantial  and  workmanlike  manner, 
to  the  satisfaction  and  acceptance  of  the  Chief  Engineer  of  the  Company, 

(Here  follows  a  statement  of  the  work  to  be  performed.) 

in  accordance  with  the  plans  hereto  attached,  identified  by  the  signatures 
of  the  parties  hereto,  or  as  herein  described,  and  the  following  GENERAL 
CONDITIONS,  requirements  and  specifications,  forming  part  of  this  contract. 


UNIFORM  CONTRACT  FORM  16—3 

The  work  covered  by  this  contract  shall  be  commenced 

and  be  completed  on  or  before  the day  of 

191 . .  time  being  of  the  essence  of  this  contract 


And  in  consideration  of  the  completion  of  the  work  described  herein,  and 
the  fulfillment  of  all  stipulations  of  this  agreement  to  the  satisfaction  and  accept- 
ance of  the  Chief  Engineer  of  the  Company,  the  said  Company  shall  pay,  or 
cause  to  be  paid,  to  said  Contractor,  the  amount  due  the  Contractor,  based  on 
the  following  prices : 

(Here  follows  a  statement  of  prices.) 

CONSTRUCTION   CONTRACT 

GENERAL  CONDITIONS 

1.  BOND.    The  Contractor  shall,  at  the  time  of  the  execution  and  delivery 
of  this  contract  and  before  the  taking  effect  of  the  same  in  other  respects, 
furnish  and  deliver  to  the  Company  a  written  bond  of  indemnity  to  the  amount 

of dollars,  in  form  and  substance  and  with  surety 

thereon  satisfactory  and  acceptable  to  the  Company,  to  insure  the  faithful 
performance  by  the  Contractor  of  all  the  covenants  and  agreements  on  the  part 
of  the  Contractor  contained  in  this  contract. 

This  bond  shall  remain  in  force  and  effect  for  the  full  amount  or  such 
smaller  amount  as  may  at  any  time  be  specified  by  the  Chief  Engineer. 

2.  CONTRACTOR'S   UNDERSTANDING.     It  is  understood  and  agreed 
that  the  Contractor  has,  by  careful  examination,  satisfied  himself  as  to  the 
nature  and  location  of  the  work,  the  conformation  of  the  ground,  the  character, 
quality  and  quantity  of  the  materials  to  be  encountered,  the  character  of  equip- 
ment and  facilities  needed  preliminary  to  and  during  the  prosecution  of  the 
work,  the  general  and  local  conditions,  and  all  other  matters  which  can  in  any 
way  affect  the  work  under  this  contract.     No  verbal  agreement  or  conversation 
with  any  officer,  agent  or  employe  of  the  Company,  either  before  or  after  the 
execution  of  this  contract,  shall  affect  or  modify  any  of  the  terms  or  obligations 
herein  contained. 

3.  INTENT  OF  PLANS  AND   SPECIFICATIONS.    .All  work  that  may 
be  called  for  in  the  specifications  and  not  shown  on  the  plans,  or  shown  on  the 
plans  and  not  called  for  in  the  specifications,  shall  be  executed  and  furnished 
by  the  Contractor  as  if  described  in  both  these  ways ;  and  should  any  work  or 
material  be  required  which  is  not  denoted  in  the  specifications  or  plans,  either 
directly  or  indirectly,  but  which  is  nevertheless  necessary  for  the  proper 
carrying  out  of  the  intent  thereof,  the  Contractor  is  to  understand  the  same  to 
be  implied  and  required,  and  shall  perform  all  such  work  and  furnish  any  such 
material  as  fully  as  if  they  were  particularly  delineated  or  described. 

4.  PERMITS.     Permits  of  a  temporary  nature  necessary  for  the  prose- 
cution of  the  work  shall  be  secured  by  the  Contractor.     Permits  for  permanent 


16-4  UNIFORM  CONTRACT  FORM 

structures  or  permanent  changes  in  existing  facilities  shall  be  secured  by  the 
Company. 

5.  PROTECTION.    Whenever  the  local  conditions,  laws  or  ordinances 
require,  the  Contractor  shall  furnish  and  maintain,  at  his  own  cost  and  expense, 
necessary  passageways,  guard  fences  and  lights  and  such  other  facilities  and 
means  of  protection  as  may  be  required. 

6.  RIGHTS   OF  [VARIOUS   INTERESTS.    Wherever  work  being  done 
by  Company  forces  or^by  other  contractors  is  contiguous  to  work  covered  by 
this  contract,  the  respective  rights  of  the  various  interests  involved  shall  be 
established  by  the  Engineer,  to  secure  the  completion  of  the  various  portions 
of  the  work  in  general  harmony. 

7.  CONSENT  TO  TRANSFER.    The  Contractor  shall  not  let  or  transfer 
this  contract  or  any  part  thereof  (except  for  the  delivery  of  material)  without 
consent  of  the  Chief  Engineer,  given  in  writing.     Such  consent  does  not  release 
or  relieve  the  Contractor  from  any  of  his  obligations  and  liabilities  under  the 
contract. 

8.  SUPERINTENDENCE.    The  Contractor  shall  constantly  superintend 
all  the  work  embraced  in  this  contract,  in  person  or  by  a  duly  authorized  mana- 
ger acceptable  to  the  Company. 

9.  TIMELY  DEMAND   FOR  POINTS  AND   INSTRUCTIONS.    The 
Contractor  shall  provide  reasonable  and  necessary  opportunities  and  facilities 
for  setting  points  and  making  measurements.     He  shall  not  proceed  until  he 
has  made  timely  demand  upon  the  Engineer  for,  and  has  received  from  him, 
such  points  and  instructions  as  may  be  necessary  as  the  work  progresses.    The 
work  shall  be  done  in  strict  conformity  with  such  points  and  instructions. 

10.  REPORT    ERRORS    AND    DISCREPANCIES.     If  the  Contractor, 
in  the  course  of  the  work,  finds  any  discrepancy  between  the  plans  and  the 
physical  conditions  of  the  locality,  or  any  errors  or  omissions  in  plans  or  in  the 
layout  as  given  by  said  points  and  instructions,  it  shall  be  his  duty  to  imme- 
diately inform  the  Engineer,  in  writing,  and  the  Engineer  shall  promptly  verify 
the  same.    Any  work  done  after  such  discovery,  until  authorized,  will  be  done 
at  the  Contractor's  risk. 

11.  PRESERVATION     OF     STAKES.    The  Contractor  must  carefully 
preserve  bench  marks,  reference  points  and  stakes,  and  in  case  of  willful  or 
careless  destruction,  he  will  be  charged  with  the  resulting  expense  and  shall 
be  responsible  for  any  mistakes  that  may  be  caused  by  their  unnecessary  loss 
or  disturbance. 

12.  INSPECTION.    All  work  and  material  shall  be  at  all  times  open  to 
the  inspection,  acceptance,  or  rejection  of  the  Engineer  or  his  duly  authorized 
representative.    The  Contractor  shall  give  the  Engineer  reasonable   notice 
of  starting  new  work  and  shall  provide  reasonable  and  necessary  facilities 
for  inspection,  even  to  the  extent  of  taking  out  portions  of  finished  work; 


UNIFORM   CONTRACT  FORM  16-5 

in  case  the  work  is  found  satisfactory,  the  cost  of  taking  out  and  replacement 
will  be  paid  by  the  Company.  No  work  shall  be  done  at  night  without  the 
previous  approval  of  the  Engineer. 

13.  DEFECTIVE  WORK  OR  MATERIAL.    Any  omission  or  failure  on 
the  part  of  the  Engineer  to  disapprove  or  reject  any  work  or  material  shall  not 
be  construed  to  be  an  acceptance  of  any  defective  work  or  material.    The 
Contractor  shall  remove,  at  his  own  expense,  any  work  or  material  condemned 
by  the  Engineer,  and  shall  rebuild  and  replace  the  same  without  extra  charge, 
and  in  default  thereof  the  same  may  be  done  by  the  Company  at  the  Contrac- 
tor's expense,  or,  in  case  the  Chief  Engineer  should  not  consider  the  defect 
of  sufficient  importance  to  require  the  Contractor  to  rebuild  or  replace  any  im- 
perfect work  or  material,  he  shall  have  power,  and  is  hereby  authorized,  to  make 
an  equitable  deduction  from  the  stipulated  price. 

14.  INSURANCE.    The  Contractor  shall  secure  in  the  name  of  the  Com- 
pany, policies  of  fire  insurance  in  amount,  form,  and  companies,  satisfactory 
to  the  Chief  Engineer,  upon  such  structures  and  material  as  shall  be  specified 
by  the  latter,  payable  to  the  Company  for  the  benefit  of  the  Contractor  or  the 
Company  as  the  Chief  Engineer  shall  find  then*  interests  to  appear. 

15.  INDEMNITY.    The  Contractor  shall  indemnify  and  save  harmless 
the  Company  from  and  against  all  losses  and  all  claims,  demands,  payments, 
suits,  actions,  recoveries  and  judgments  of  every  nature  and  description  brought 
or  recovered  against  it,  by  reason  of  any  act  or  omission  of  the  said  Contractor, 
his  agents  or  employes,  in  the  execution  of  the  work  or  in  consequence  of  any 
negligence  or  carelessness  in  guarding  the  same. 

16.  SETTLEMENT    FOR    WAGES.     Whenever,  in  the  opinion  of  the 
Chief  Engineer,  it  may  be  necessary  for  the  progress  of  the  work  to  secure  to 
any  of  the  employes  engaged  on  the  work  under  this  contract  any  wages  which 
may  then  be  due  them,  the  Company  is  hereby  authorized  to  pay  said  employes 
the  amount  due  them  or  any  lesser  amount,  and  the  amount  so  paid  them,  as 
shown  by  their  receipts,  shall  be  deducted  from  any  moneys  that  may  be  or 
become  payable  to  said  Contractor. 

17.  LIENS.     If  at  any  time  there  shall  be  evidence  of  any  lien  or  claim 
for  which  the  Company  might  become  liable  and  which  is  chargeable  to  the  Con- 
tractor, the  Company  shall  have  the  right  to  retain  out  of  any  payment  then 
due  or  thereafter  to  become  due,  an  amount  sufficient  to  completely  indemnify 
the  Company  against  such  lien  or  claim,  and  if  such  lien  or  claim  be  valid,  the 
Company  may  pay  and  discharge  the  same,  and  deduct  the  amount  so  paid  from 
any  moneys  which  may  be  or  become  due  and  payable  to  the  Contractor. 

18.  WORK    ADJACENT    TO    RAILROAD.     Wherever  the  work  em- 
braced in  this  contract  is  near  the  tracks,  structures  or  buildings  of  this  Com- 
pany or  of  other  railroads,  the  Contractor  shall  use  proper  care  and  vigilance 
to  avoid  injury  to  persons  or  property.    The  work  must  be  so  conducted  as  not 
to  interfere  with  the  movement  of  trains  or  other  operations  of  the  railroad ; 
or,  if  in  any  case  such  interference  be  necessary,  the  Contractor  shall  not  pro- 


16-6  UNIFORM  CONTRACT  FORM 

ceed  until  he  has  first  obtained  specific  authority  and  directions  therefor  from  the 
proper  designated  officer  of  the  Company  and  has  the  approval  of  the  Engineer. 

19.  RISK.    The  work  under  this  contract  in  every  respect  shall  be  at  the 
risk  of  the  Contractor  until  finished  and  accepted,  except  damage  or  injury 
caused  directly  by  Company's  agents  or  employes. 

20.  ORDER  AND   DISCIPLINE.    The  Contractor  shall  at  all  times  en- 
force strict  discipline  and  good  order  among  his  employes,  and  any  employe 
of  the  Contractor  who  shall  appear  to  be  incompetent,  disorderly  or  intemperate, 
or  in  any  other  way  disqualified  for  or  unfaithful  to  the  work  intrusted  to  him, 
shall  be  discharged  immediately  on  the  request  of  the  Engineer,  and  he  shall 
not  again  be  employed  on  the  work  without  the  Engineer's  written  consent. 

21.  CONTRACTOR  NOT  TO  HIRE  COMPANY'S  EMPLOYES.     The 

Contractor  shall  not  employ  or  hire  any  of  the  Company's  employes  without 
the  permission  of  the  Engineer. 

22.  INTOXICATING     LIQUORS     PROHIBITED.    The  Contractor,  in 
so  far  as  his  authority  extends,  shall  not  permit  the  sale,  distribution  or  use  of 
any  intoxicating  liquors  upon  or  adjacent  to  the  work,  or  allow  any  such  to  be 
brought  upon,  to  or  near  the  property  of  the  Company. 

23.  CLEANING  UP.    The  Contractor  shall,  as  directed  by  the  Engineer, 
remove  from  the  Company's  property  and  from  all  public  and  private  property, 
at  his  own  expense,  all  temporary  structures,  rubbish  and  waste  materials 
resulting  from  his  operations. 

24.  ENGINEER   AND    CHIEF   ENGINEER   DEFINED.    Wherever  in 
this  contract  the  word  Engineer  is  used,  it  shall  be  understood  as  referring  to 
the  Chief  Engineer  of  the  Company,  acting  personally  or  through  an  assistant 
duly  authorized  in  writing  for  such  act  by  the  Chief  Engineer,  and  wherever  the 
words  Chief  Engineer  are  used  it  shall  be  understood  as  referring  to  the  Chief 
Engineer  in  person,  and  not  to  any  assistant  engineer. 

25.  POWER  OF  ENGINEER.    The  Engineer  shall  have  power  to  reject 
or  condemn  all  work  or  material  which  does  not  conform  to  this  contract ;   to 
direct  the  application  of  forces  to  any  portion  of  the  work  which,  in  his  judg- 
ment, requires  it;    to  order  the  force  increased  or  diminished,  and  to  decide 
questions  which  arise  between  the  parties  relative  to  the  execution  of  the  work. 

26.  ADJUSTMENT  OF  DISPUTE.    All  questions  or  controversies  which 
may  arise  between  the  Contractor  and  the  Company,  under  or  in  reference  to 
this  contract,  shall  be  subject  to  the  decision  of  the  Chief  Engineer,  and  his 
decision  shall  be  final  and  conclusive  upon  both  parties. 

27.  ORDER    OF    COMPLETION;    USE    OF    COMPLETED    POR- 
TIONS.   The  Contractor  shall  complete  any  portion  or  portions  of  the  work 
in  such  order  of  time  as  the  Engineer  may  require.    The  Company  shall  have 
the  right  to  take  possession  of  and  use  any  completed  or  partially  completed  por- 


UNIFORM  CONTRACT  FORM  16_7 

tions  of  the  work,  notwithstanding  the  time  for  completing  the  entire  work  or 
such  portions  may  not  have  expired ;  but  such  taking  possession  and  use  shall 
not  be  deemed  an  acceptance  of  the  work  so  taken  or  used  or  any  part  thereof. 
If  such  prior  use  increases  the  cost  of  or  delays  the  work,  the  Contractor  will  be 
entitled  to  such  extra  compensation,  or  extension  of  time,  or  both,  as  the  Chief 
Engineer  may  determine. 

28.  CHANGES.    The  Company  shall  have  the  right  to  make  any  changes 
that  may  be  hereafter  determined  upon,  in  the  nature  or  dimensions  of  the 
work,  either  before  or  after  its  commencement,  and  such  changes  shall  in  no 
way  affect  or  void  the  obligations  of  this  contract.     If  such  changes  make  any 
change  in  the  cost  of  the  work,  an  equitable  adjustment  shall  be  made  by  the 
Chief  Engineer  to  cover  the  same. 

29.  EXTRA  WORK.    No  bill  or  claim  for  extra  work  or  material  shall  be 
allowed  or  paid  unless  the  doing  of  such  extra  work  or  the  furnishing  of  such 

extra  material  shall  have  been  authorized  in  writing  by  the 

Engineer. 

The  price  for  such  work  shall  be  determined  by  the  Chief  Engineer,  who 
may  either  fix  a  unit  price  or  a  lump-sum  price,  or  may,  if  he  so  elects,  provide 
that  the  price  shall  be  determined  by  the  actual  cost,  to  which  shall  be  added 

per  cent,  to  cover  general  expense  and  superintendence,  profits, 

contingencies,  use  of  tools,  Contractor's  risk  and  liability.  If  the  Contractor 
shall  perform  any  work  or  furnish  any  material  which  is  not  provided  for  in  this 
contract,  or  which  was  not  authorized  in  writing  by  the  Engineer,  said  Con- 
tractor shall  receive  no  compensation  for  such  work  or  material  so  furnished, 
and  does  hereby  release  and  discharge  the  Company  from  any  liability  therefor. 

If  the  Contractor  shall  proceed  with  such  extra  work  or  the  furnishing  of 
such  extra  material  after  receiving  the  written  authority  therefor,  as  herein- 
before provided,  then  such  work  or  material,  stated  in  the  written  authority 
of  the  Engineer,  shall  be  covered,  governed  and  controlled  by  all  the  terms  and 
provisions  of  this  contract,  subject  to  such  prices  as  may  be  agreed  upon  or 
fixed  by  the  Chief  Engineer. 

If  the  Contractor  shall  decline  or  fail  to  perform  such  work  or  furnish  such 
extra  material  as  authorized  by  the  Engineer  in  writing,  as  aforesaid,  the  Com- 
pany may  then  arrange  for  the  performance  of  the  work  in  any  manner  it  may 
see  fit,  the  same  as  if  this  contract  had  not  been  executed,  and  the  Contractor 
shall  not  interfere  with  such  performance  of  the  work. 

30.  PROPERTY  AND   RIGHT   OF   ENTRY.    The  Company  shall  pro- 
vide the  lands  upon  which  the  work  under  this  contract  is  to  be  done,  except 
that  the  Contractor  shall  provide  land  required  for  the  erection  of  temporary 
construction  facilities  and  storage  of  his  material,  together  with  right  of  access 
to  the  same. 

The  Contractor  shall  not  ship  any  material  or  equipment  until  he  has  re- 
ceived written  notice  from  the  Engineer  that  he  may  proceed  with  said  work 
or  any  part  thereof. 

31.  UNAVOIDABLE  DELAYS;  EXTENSION  OF  TIME  ON  PARTS 
OF    WORK.     If  the  Contractor  shall  be  delayed  in  the  performance  of  the 
work  from  any  cause  for  which  the  Company  is  responsible,  he  shall,  upon 


16-8  UNIFORM   CONTRACT  FORM 

written  application  to  the  Chief  Engineer  at  the  time  of  such  delay,  be  granted 
such  extension  of  time  as  the  Chief  Engineer  shall  deem  equitable  and  just. 

32.  SUSPENSION     OF    WORK.    The  Company  may  at  any  time  stop 

the  work,  or  any  part  thereof,  by  giving days'  notice  to  the  Contractor 

in  writing.    The  work  shall  be  resumed  by  the  Contractor  in  ten  (10)  days  after 
the  date  fixed  in  the  written  notice  from  the  Company  to  the  Contractor  so  to 
do.    The  Company  shall  not  be  held  liable  for  any  damages  or  anticipated 
profits  on  account  of  the  work  being  stopped,  or  for  any  work  done  during  the 
interval  of  suspension.     It  will,  however,  pay  the  Contractor  for  expense  of  men 
and  teams  necessarily  retained  during  the  interval  of  suspension,  provided  the 
Contractor  can  show  that  it  was  not  reasonably  practicable  to  move  these  men 
and  teams  to  other  points  at  which  they  could  have  been  employed.    The  Com- 
pany will  further  pay  the  Contractor  for  time  necessarily  lost  during  such  sus- 
pension at  the  rate  of per  cent,  per  annum  on  the  estimated  value 

of  materials,  equipments,  and  fixtures  furnished  by  the  Contractor  on  the  work 

which  are  necessarily  idle  during  such  suspension,  said  rate  of per 

cent,  per  annum  being  understood  to  include  depreciation,  interest  and  insur- 
ance.   But  if  the  work,  or  any  part  thereof,  shall  be  stopped  by  the  notice  in 
writing  aforesaid,  and  if  the  Company  does  not  give  notice  in  writing  to  the 

Contractor  to  resume  work  at  a  date  within of  the  date 

fixed  in  the  written  notice  to  suspend,  then  the  Contractor  may  abandon  that 
portion  of  the  work  so  suspended  and  he  will  be  entitled  to  the  estimates  and 
payments  for  such  work  so  abandoned,  as  provided  in  Section  38  of  this  con- 
tract. 

33.  (a)  EXPEDITING    WORK,     CORRECTING     IMPERFECTIONS. 
If  the  Chief  Engineer  of  the  Company  shall  at  any  time  be  of  the  opinion  that  the 
Contractor  is  neglecting  to  remedy  any  imperfections  in  the  work,  or  is  not 
progressing  with  the  work  as  fast  as  necessary  to  insure  its  completion  within 
the  time  and  as  required  by  the  contract,  or  is  otherwise  violating  any  of  the 
provisions  of  this  contract,  said  Chief  Engineer,  in  behalf  of  the  Company,  shall 
have  the  power,  and  it  shall  be  his  duty  to  notify  the  Contractor  to  remedy 
such  imperfections,  proceed  more  rapidly  with  said  work,  or  otherwise  comply 
with  the  provisions  of  this  contract. 

(b)  ANNULMENT.     In  such  case  the  Company  may  give  the  Contractor 
ten  (10)  days'  written  notice,  and  at  the  end  of  that  time,  if  the  Contractor  con- 
tinues to  neglect  the  work,  the  Company  may  provide  labor  and  materials  and 
deduct  the  cost  from  any  money  due  the  Contractor  under  this  agreement; 
and  may  terminate  the  employment  of  the  Contractor  under  this  agreement  and 
take  possession  of  the  premises  and  of  all  materials,  tools  and  appliances 
thereon,  and  employ  such  forces  as  may  be  necessary  to  finish  the  work.     In 
such  case  the  Contractor  shall  receive  no  further  payment  until  the  work  shall 
be  finished,  when,  if  the  unpaid  balance  that  would  be  due  under  this  contract 
exceeds  the  cost  to  the  Company  of  finishing  the  work,  such  excess  shall  be 
paid  to  the  Contractor ;  but  if  such  cost  exceeds  such  unpaid  balance,  the  Con- 
tractor shall  pay  the  difference  to  the  Company. 

(c)  COMPANY  MAY  DO  PART  OF  WORK.    Upon  failure  of  the  Con- 
tractor to  comply  with  any  notice  given  in  accordance  with  the  provisions 


UNIFORM  CONTRACT  FORM  16-9 

hereof,  the  Company  shall  have  the  alternative  right,  instead  of  assuming  charge 
of  the  entire  work,  to  place  additional  forces,  tools,  equipment  and  materials 
on  parts  of  the  work  for  the  purpose  of  carrying  on  such  parts  of  the  work, 
and  the  cost  incurred  by  the  Company  in  carrying  on  such  parts  of  the  work 
shall  be  payable  by  the  Contractor,  and  such  work  shall  be  deemed  to  be  carried 
on  by  the  Company  on  account  of  the  Contractor,  and  the  Contractor  shall  be 
allowed  therefor  the  contract  price.  The  Company  may  retain  the  amount 

of  the  cost  of  such  work,  with per  cent,  added,  from  any  sum  or 

sums  due  or  to  become  due  the  Contractor  under  this  agreement. 

34  (a)  ANNULMENT  WITHOUT  FAULT  OF  CONTRACTOR.  The 
Company  shall  have  the  right  at  any  time,  for  reasons  which  appear  good  to  it, 
to  annul  this  contract  upon  giving  thirty  days'  notice  in  writing  to  the  Contractor, 
in  which  event  the  Contractor  shall  be  entitled  to  the  full  amount  of  the  estimate 
for  the  work  done  by  him  under  the  terms  and  conditions  of  this  contract  up 
to  the  time  of  such  annulment,  including  the  retained  percentage.  The  Con- 
tractor shall  be  reimbursed  by  the  Company  for  such  expenditures  as  in  the 
judgment  of  the  Chief  Engineer  are  not  otherwise  compensated  for,  and  as  are 
required  in  preparing  for  and  moving  to  and  from  the  work ;  the  intent  being 
that  an  equitable  settlement  shall  be  made  with  the  Contractor. 

(b)  NOTICE  —  HOW  SERVED.    Any  notice  to  be  given  by  the  Company 
to  the  Contractor  under  this  contract  shall  be  deemed  to  be  served  if  the  same 
be  delivered  to  the  man  in  charge  of  any  office  used  by  the  Contractor,  or  to  his 
foreman  or  agent  at  or  near  the  work,  or  deposited  in  the  postoffice,  postpaid, 
addressed  to  the  Contractor  at  his  last  known  place  of  business. 

(c)  REMOVAL  OF  EQUIPMENT.     In  case  of  annulment  of  this  contract 
before  completion  from  any  cause  whatever,  the  Contractor,  if  notified  to  do  so 
by  the  Company,  shall  promptly  remove  any  part  or  all  of  his  equipment  and  sup- 
plies from  the  property  of  the  Company,  failing  which  the  Company  shall  have 
the  right  to  remove  such  equipment  and  supplies  at  the  expense  of  the  Con- 
tractor. 

35.  FAILURE    TO    MAKE    PAYMENTS.     Failure  by  the  Company  to 
make  payments  at  the  times  provided  in  this  agreement  shall  give  the  Contrac- 
tor the  right  to  suspend  work  until  payment  is  made,  or  at  his  option,  after 
thirty  (30)  days'  notice  in  writing,  should  the  Company  continue  to  default,  to 
terminate  this  contract  and  recover  the  price  of  all  work  done  and  materials 
provided  and  all  damages  sustained,  and  such  failure  to  make  payments  at  the 
times  provided  shall  be  a  bar  to  any  claim  by  the  Company  against  the  Con- 
tractor for  delay  in  completion  of  the  work  due  to  such  suspension  or  failure  to 
pay. 

36.  MONTHLY  ESTIMATE.     So  long  as  the  work  herein  contracted 
for  is  prosecuted  in  accordance  with  the  provisions  of  this  contract,  and  with 
such  progress  as  may  be  satisfactory  to  the  Chief  Engineer,  the  said  Chief 
Engineer  will  on  or  about  the  first  day  of  each  month,  make  an  approximate 
estimate  of  the  proportionate  value  of  the  work  done  and  of  material  furnished 
or  delivered  upon  the  Company's  property  at  the  site  of  the  work,  up  to  and 


16-10  UNIFORM  CONTRACT  FORM 

including  the  last  day  of  the  previous  month.    The  amount  of  said  estimate, 

after  deducting per  cent,  and  all  previous  payments,  shall  be  due 

and  payable  to  the  Contractor  at  the  office  of  the  Treasurer  of  the  Company  on 
or  about  the day  of  the  current  month. 

37.  ACCEPTANCE.    The  work  shall  be  inspected  for  acceptance  by  the 
Company  promptly  upon  receipt  of  notice  in  writing  that  the  work  is  ready  for 
such  inspection. 

38.  FINAL    ESTIMATES.    Upon  the  completion  and  acceptance  of  the 
work  the  Chief  Engineer  shall  execute  a  certificate  over  his  signature  that  the 
whole  work  provided  for  in  this  agreement  has  been  completed  and  accepted 
by  him  under  the  terms  and  conditions  thereof,  whereupon  the  entire  balance 
found  to  be  due  to  the  Contractor,  including  said  retained  percentage,  shall 
be  paid  to  the  Contractor  at  the  office  of  the  Treasurer  of  the  Company  within 
days  after  the  date  of  said  final  certificate.    Before  the  time  of  pay- 
ment of  said  final  estimate  the  Contractor  shall  submit  evidence  satisfactory 
to  the  Chief  Engineer  that  all  payrolls,  material  bills,  and  outstanding  indebted- 
ness, in  connection  with  this  work,  have  been  paid. 

This  agreement  shall  inure  to  the  benefit  of  and  be  binding  upon  the  legal 
representatives  and  successors  of  the  parties  respectively. 

In  Witness  Whereof,  the  parties  hereto  have  executed  this  agreement  in 
the  day  and  year  first  above  written. 

WITNESS: 


This  Uniform  Contract  Form  is  the  result  of  the  work  of  a  special 
committee  of  the  Association.  It  has  been  worked  out,  through  careful 
consideration  in  Committee,  during  several  years,  has  had  the  advantage 
of  extensive  discussion  at  more  than  one  annual  meeting,  and  in  the  mean- 
time has  been  submitted  to  the  legal  departments  of  a  number  of  railroads. 
Its  history  of  careful  consideration  and  formal  adoption  by  the  Associa- 
tion seems  to  justify  its  use  here  as  a  groundwork  for  the  discussion  of  the 
important  clauses  in  the  provisions  of  Contracts  for  public  work  or  for 
important  corporation  construction  work. 

Considering  the  first  clause : 


THIS   AGREEMENT,  made  this day  of 

in   the  year    by  and  between 


party  of  the  first  part,  hereinafter  called  the  Contractor,  and 
party  of  the  second  part,  hereinafter  called  the  Company. 


UNIFORM  CONTRACT  FORM  16-11 

it  will  be  noted  that  one  party  is  called  the  "  party  of  the  first  part,"  and 
the  other,  the  "  party  of  the  second  part."  These  designations  serve 
to  make  a  clear  distinction  in  describing  or  naming  the  two  parties  to  the 
Contract,  and  these  designations  are  used  for  this  purpose  only  in  this 
and  many  other  carefully  drawn  Contracts.  Older  Contracts  often  used 
"  party  of  the  first  part  "  and  "  party  of  the  second  part  "  throughout 
the  body  of  the  Contract.  In  good  modern  practice  the  term  Contrac- 
tor for  one  party  and  the  term  Company,  Board,  Commission,  City, 
State,  Owner  or  similar  appropriate  name  for  the  other  party,  is  used 
in  all  cases  afterwards  in  the  Contract.  It  makes  no  difference  whether 
the  Contractor  is  called  "  party  of  the  first  part  "or  "  party  of  the  sec- 
ond part." 

The  words  used  in  stating  the  agreement  are  found  to  vary  somewhat 
to  suit  the  taste  of  the  Engineer,  or  lawyer,  or  other  person  who  drafts 
the  Contract. 

The  form  given  above  is : 

This  agreement  made 

Two  other  forms  in  common  use  are : 

A.  This  agreement  made  and  entered  into 

B.  This  agreement  made  and  concluded 

All  of  these  three  phrases  are  well  established  in  use.  The  simple 
form  "  This  agreement  made  "  has  been  adopted  both  by  the  American 
Railway  Engineering  Association  and  by  the  American  Institute  of  Archi- 
tects, and  it  seems  preferable  on  the  ground  of  simplicity.  Another  read- 
ing is: 

C.  Articles  of  Agreement  made,  etc.,  (followed  by) 
Now  this  agreement  witnesseth,  etc. 

This  seems  less  simple  and  to  have  no  advantage  over  the  others. 
The  next  clause  is : 

WITNESSETH,  That,  in  consideration  of  the  covenants  and  agreements 
hereinafter  mentioned,  to  be  performed  by  the  parties  hereto  and  of  the  pay- 
ments hereinafter  agreed  to  be  made,  it  is  mutually  agreed  as  follows: 

Slightly  different  readings,  somewhat  less  simple,  are  these : 

A.  Witnesseth,  That  the  parties  to  these  presents,  each  in  consideration  of 
the  covenants  and  agreements  on  the  part  of  the  other,  herein  contained,  do  hereby 
covenant  and  agree,  the  party  of  the  first  part  for  itself,  and  the  party  of  the  second 
part  for  themselves,  and  their  heirs,  executors,  administrators  and  assigns,  and 


16—12  UNIFORM   CONTRACT   FORM 

under  the  penalty  expressed  in  a  bond  bearing  even  date  with  these  presents,  and 
hereto  annexed,  as  follows : 

B.  Witnesseth,  that  the  parties  to  these  presents,  each  in  consideration  of 
the  undertakings,  promises  and  agreements  on  the  part  of  the  other  herein  con- 
tained, have  undertaken,  promised  and  agreed,  and  do  hereby  undertake,  promise 
and  agree,  the  party  of  the  first  part  for  itself,  its  successors  and  assigns,  and  the 
party  (parties)  of  the  second  part  for  himself  (themselves)  and  his  (their)  heirs, 
executors  and  administrators  or  successors  as  follows : 

It  should  be  noted  that  the  Uniform  Contract  Form  provides  near  the 
close  of  the  entire  agreement,  that : 

This  agreement  shall  inure  to  the  benefit  of  and  be  binding  upon  the  legal 
representatives  and  successors  of  the  parties  respectively. 

This  apparently  covers  the  reference  to  "  heirs,  executors,  and  ad- 
ministrators "  which  occurs  above. 

Another  reading  found  elsewhere  is  this  : 

C.  Witnesseth,  that  for  and  in  consideration  of  the  payments  and  agreements 
hereinafter  mentioned,  to  be  made  and  performed  by  the  said  party  of  the  first 
part,  and  under  the  penalty  expressed  in  the  bond  bearing  even  date  with  these 
presents,  and  hereto  annexed,  the  said  party  of  the  second  part  agrees,  etc. 

A  very  simple  form  used  in  the  Standard  Contract  Form  of  the  "  Amer- 


D.  Witnesseth  that  the  Contractor,  in  consideration  of  the  agreements  herein 
made  by  the  Owner,  agrees  with  the  Owner  as  follows : 

Another  simple  form  including  both  clauses  discussed  above  is  this  : 

E.  The  Cambridge  Bridge  Commission,  a  Commission  duly  created  by  Chap- 
ter 467  of  the  Acts  and  Resolves  of  the  Massachusetts  Legislature,  Session  of  1898, 
and  the  other  party  signing  this  contract,  hereinafter  designated  as  Contractor, 
agree  as  follows : 

Later  Contracts,  however,  made  by  the  same  Commission  have  had  a 
more  elaborate  form.     The  above  might  have  been  written  in  this  way : 

F.  The  Cambridge  Bridge  Commission,  etc.,  party  of  the  first  part,  herein- 
after called  the  Commission,  and  Benjamin  Young,  party  of  the  second  part, 
hereinafter  called  the  Contractor,  mutually  agree  as  follows : 

Then  the  form  would  still  be  simple  and  yet  a  trifle  clearer.  The  omission 
of  the  words,  "  each  in  consideration  of  the  covenants  and  agreements 
hereinafter  mentioned,  to  be  performed  by  the  parties  hereto,"  etc.,  seems 
not  important  if  the  Contract  in  its  later  terms  definitely  provides  that 


UNIFORM  CONTRACT  FORM  16—13 

each  party  agrees  to  do  certain  things.  Probably  most  lawyers  or  others 
drafting  a  Contract  would  prefer  to  have  the  word  "  consideration  "  used 
in  this  connection. 

Even  then,  the  following  simple  form  has  much  to  commend  it : 

G.  The  Cambridge  Bridge  Commission,  etc.,  party  of  the  first  part,  herein- 
after called  the  Commission,  and  Benjamin  Young,  party  of  the  second  part,  here- 
inafter called  the  Contractor,  each  in  consideration  of  the  agreements  to  be  per- 
formed, and  the  payments  to  be  made  by  the  parties  hereto,  mutually  agree  as 
follows : 

In  this  form,  the  term  "  witnesseth  "  is  dispensed  with,  as  are  several 
other  words  rather  formal  in  character. 
One  form  in  use  provides  that : 

H.  A,  B,  and  C,  the Commission,  herein  acting  for  the  Common- 
wealth of  Massachusetts,  and  without  personal  liability  to  themselves,  and 

hereinafter  designated  as  Contractor,  agree  as  follows  : 

The  Contractor  shall  furnish  all  the  materials,  superintendence,  labor,  equip- 
ment and  transportation,  except  as  hereinafter  specified,  and  shall  execute, 
construct  and  finish,  in  an  expeditious,  substantial  and  workmanlike  manner, 
to  the  satisfaction  and  acceptance  of  the  Chief  Engineer  of  the  Company, 

(Here  follows  a  statement  of  the  work  to  be  performed.) 

Other  readings  taken  from  actual  Contract  forms  are : 

A.  The  contractor  agrees,  at  his  own  proper  cost  and  expense,  to  do  and  com- 
plete all  the  work  and  furnish  all  the  labor,  machinery,  tools  and  materials,  except 
as  herein  specified,  and  to  do  everything  required  to  build,  etc. 

B.  The  Contractor  shall  furnish  and  do  everything,  except  as  herein  otherwise 
provided,  necessary  to  complete  the  work  in  accordance  with  the  terms  of  this 
contract  and  with  the  requirements  of  the  Chief  Engineer  thereunder. 

C.  The  Contractor  agrees  at  his  own  expense,  to  do  and  complete  all  the  work 
and  furnish  all  the  materials  required  to  be  done  or  furnished  by  him  in  the  follow- 
ing specifications  in  a  proper,  thorough  and  workmanlike  manner,  in  accordance  with 
the  terms  of  this  contract  and  specifications,  and  to  the  satisfaction  of  the  Chief 
Engineer ;  and  to  do  all  and  singular  the  things  in  this  contract  and  specifications 
provided. 

D.  The  Contractor  shall  and  will  at  his  own  cost  and  expense  furnish  all  the 
materials  not  otherwise  expressly  designated  to  be  furnished  by  the  Commission, 
and  do  all  the  work  called  for  by  this  contract,  as  set  forth  in  the  specification  here- 
inafter contained,  to  wit : 

Other  forms  are  in  part  as  shown  below : 

E.  At  his  proper  cost  and  expense  to  do  all  the  work  and  furnish  all  materials, 
tools,  labor  and  all  appliances  and  appurtenances  called  for  by  this  agreement. 


16-14  UNIFORM  CONTRACT  FORM 

F.  All  material  and  supplies,  plant,  tools,  and  implements,  teams,  cars,  and 
tracks ;  in  fact  all  material  and  appliances  of  every  sort  or  kind  that  may  be  neces- 
sary for  the  full  and  complete  carrying  out  of  this  contract. 

G.  The  Contractor  shall  provide  a  complete  and  adequate  construction  plant 
of  tools  and  machinery  of  a  character  suitable  for  performing  satisfactorily  and 
expeditiously  the  various  parts  of  the  work,  and  an  effective  organization  of  work- 
men, mechanics,  tradesmen  and  other  employees  trained  and  skilled  in  their  various 
occupations.. 

The  following  form  has  been  used  by  the  Board  of  Water  Supply  of 
New  York : 

H.  The  Contractor  shall  do  all  the  work  and  furnish  all  the  materials,  tools 
and  appliances,  except  as  herein  otherwise  specified,  necessary  or  proper  for  per- 
forming and  completing  the  work  required  by  this  contract,  in  the  manner  and 
within  the  time  hereinafter  specified.  He  shall  complete  the  entire  work  to  the 
satisfaction  of  the  Board,  and  in  accordance  with  the  specifications  and  drawings 
herein  mentioned. 

Another  New  York  form  adds  to  the  above : 

/.  At  the  prices  herein  agreed  upon  and  fixed  therefor;  provided,  however, 
that  said  contract  drawings  may  from  time  to  time  be  altered  or  modified  as  here- 
inafter provided. 

Reference  to  Section  28  will  show  a  proper  provision  for  changes,  which 
hardly  need  to  be  covered  here. 

Either  of  the  above  readings  is  valuable  because  it  provides  in  a  general 
way,  independent  of  Specifications  or  General  Conditions,  that  the  Contrac- 
tor shall  carry  out  the  Contract  to  the  satisfaction  of  the  Chief  Engineer. 
Some  Contracts  drawn  by  very  competent  Boards  fail  to  include  this 
clause.  .Nevertheless  the  clause  seems  important  in  two  particulars; 
it  provides  a  general  clause  covering  the  Contract  without  specific  items 
which  occur  later,  and  it  provides  that  the  work  shall  be  done  to  the  satis- 
faction of  the  Chief  Engineer.  The  importance  of  the  latter  provision  will 
be  discussed  to  better  advantage  in  connection  with  Section  26.  That  the 
New  York  Water  Supply  Contract  provides  for  "  the  satisfaction  of  the 
Board  "  rather  than  of  the  Chief  Engineer  is  probably  due  to  a  special 
provision  of  Statute  Law  applying  to  New  York  City  exclusively,  and  for 
many  Contracts  would  not  be  advantageous. 

in  accordance  with  the  plans  hereto  attached  identified  by  the  signatures  of 
the  parties  hereto,  or  herein  described,  and  the  following  GENERAL  CONDI- 
TIONS, requirements  and  specifications,  forming  part  of  this  contract. 

This  clause  provides  for  identifying  plans  by  the  signatures  of  the  par- 
ties, which  represents  good  practice.  In  some  cases,  however,  a  simple 


UNIFORM  CONTRACT  FORM  16-15 

description  of  a  plan  may  suffice  and  be  more  convenient.  Reference  to 
the  General  Conditions  which  follow,  seems  necessary ;  as  also  reference 
to  the  Specifications  that,  for  railroad  work  of  various  sorts,  can  best  be 
arranged  in  a  separate  document  "  which  forms  part  of  the  Contract." 

The  work  covered  by  this  contract  shall  be  commenced 

and  be  completed  on  or  before  the   

day  of   191 ....  time  being  of  the  essence 

of  this  contract. 

Many  Contracts  fail  to  use  the  words,  "  time  being  of  the  essence  of 
the  Contract,"  or  words  of  similar  purport.  This  clause  seems  wise  in 
case  provision  is  made  either  for  "  liquidated  damages  "  or  damages 
otherwise  determined,  if  the  work  is  not  completed  at  the  time  specified. 
It  is  equally  desirable  wherever  clauses  are  introduced  providing  that  the 
Commission  may  take  the  work  from  the  Contractor,  or  take  other  special 
measures  in  case  the  Contractor  fails  to  conduct  the  work  in  an  expedi- 
tious manner.  Along  this  line  the  New  York  Water  Supply  Contract 
provides : 

A.  The  time  in  which  the  various  portions  and  the  whole  of  this  Contract 
are  to  be  performed  and  the  work  is  to  be  completed  is  of  the  essence  of  this  agree- 
ment. 

The  blank  lines  in  the  Uniform  Contract  Form  allow  a  provision  to  be 
introduced  dealing  with  damages  for  failure  to  complete  the  work  within 
the  time  specified,  which  is  a  suitable  provision  in  many  Contracts  but 
not  in  all. 

A  discussion  of  penalty  and  liquidated  damages  and  of  forms  used  in 
specifying  the  latter,  may  be  found  in  the  next  chapter. 

And  in  consideration  of  the  completion  of  the  work  described  herein,  and 
the  fulfillment  of  all  stipulations  of  this  agreement  to  the  satisfaction  and  ac- 
ceptance of  the  Chief  Engineer  of  the  Company,  the  said  Company  shall  pay,  or 
cause  to  be  paid,  to  said  Contractor,  the  amount  due  to  the  Contractor,  based 
on  the  following  prices : 

Other  readings  are : 

A.  It  is  further  agreed  that  the  following  prices  shall  be  paid  by  the  Common- 
wealth and  received  by  the  Contractor  as  full  compensation. 

B.  The  City  agrees  to  pay  and  the  Contractor  agrees  to  receive  the  prices 
specified  hi  the  proposal  submitted  by  him  ....  which  said  prices  are  as  follows 
to  wit : 

C.  The  Commission  shall  pay  and  the  Contractor  shall  be  compensated  in 
full  for  everything  furnished  and  done  by  him  under  this  contract  and  for  well  and 


16-16  UNIFORM   CONTRACT  FORM 

faithfully  completing  the  work  and  the  whole  thereof  upon  the  basis  of  the  several 
prices  set  forth  and  provided  in  the  following  items  herein : 

D.  The  City  will  pay  and  the  Contractor  shall  receive: 

E.  It  is  agreed  that  the  Commonwealth  shall  pay  and  that  the  Contractor 
shall  receive : 

F.  The  Contractor  agrees  to  construct  the  part  hereinafter  described  of  a 
Rapid  Transit  Railroad,  with  its  appurtenances.     The  City  agrees  to  pay  the 
Contractor  the  sums  of  money  hereinafter  mentioned  at  the  times  and  in  the  manner 
and  upon  the  terms  and  conditions  hereinafter  set  forth. 

The  direct  reading  that  the  "  City  shall  pay  and  the  Contractor  shall 
receive  "  seems  desirable ;  this  is  a  positive  agreement  by  each  party  to 
one  of  the  most  important  provisions  of  the  Contract. 

Many  Contracts  add  to  this,  clauses  of  the  following  character : 

G.  As  full  compensation  for  furnishing  all  the  materials  called  for,  not  found 
in  the  work,  and  for  all  labor  and  use  of  tools  and  other  implements  necessary  for 
executing  the  work  contemplated  in  this  contract ;  also  for  all  loss  or  damage  aris- 
ing out  of  the  nature  of  the  work,  or  from  the  action  of  the  elements,  or  from  any 
unforeseen  obstructions  or  difficulties  which  may  be  encountered  in  the  prosecution 
of  the  work,  and  for  all  reasons  of  every  description  connected  therewith ;   also  for 
all  expense  incurred  by  and  in  consequence  of  the  suspension  of  discontinuance 
of  said  work  as  herein  specified  and  for  well  and  faithfully  completing  the  work, 
and  the  whole  thereof,  according  to  the  plans  and  specifications  and  requirements 
of  the  Engineer  under  them,  which  said  prices  are  as  follows  to  wit : 

A  large  part  of  this  seems  to  be  legal  verbiage  and  much  of  it  may  be 
provided  for  elsewhere  in  the  Contract,  as  appears  to  be  done  in  the  Uni- 
form Contract  Form.  It  appears  to  be  unnecessary  here. 

The  following  reading  is  suggested : 

H.  The  Company  will  pay  and  the  Contractor  will  receive  as  full  compensa- 
tion for  the  completion  of  the  work  described  herein  and  the  fulfilment  of  all  stipu- 
lations of  this  agreement  to  the  satisfaction  and  acceptance  of  the  Chief  Engineer 
of  the  Company,  the  amount  found  by  the  Chief  Engineer  to  be  due  the  Contractor, 
based  on  the  following  prices : 

Monthly  payments  are  provided  for  in  Section  36. 

A  provision  is  frequently  added  after  the  schedule  of  quantities  stating 
that  they  are  approximate.  Such  a  provision  is  usually  introduced  also 
in  the  Proposal.  It  seems  desirable  that  the  Contract  should  contain 
such  a  provision,  and  forms  for  this  purpose  are  discussed  in  the  next 
chapter. 


UNIFORM   CONTRACT  FORM  16-17 


GENERAL  CONDITIONS 

1.  BOND.  The  Contractor  shall,  at  the  time  of  the  execution  and  delivery 
of  this  contract  and  before  the  taking  effect  of  the  same  in  other  respects, 
furnish  and  deliver  to  the  Company  a  written  bond  of  indemnity  to  the  amount 

of dollars,  in  form  and  substance  and  with 

surety  thereon  satisfactory  and  acceptable  to  the  Company,  to  insure  the  faith- 
ful performance  by  the  Contractor  of  all  the  covenants  and  agreements  on  the 
part  of  the  Contractor  contained  in  this  contract. 

This  bond  shall  remain  in  force  and  effect  for  the  full  amount  or  such 
smaller  amount  as  may  at  any  time  be  specified  by  the  Chief  Engineer. 

The  provision  that  a  Bond  shall  be  furnished  seems  at  first  not  to  be 
appropriate  as  a  part  of  the  Contract  itself ;  this  is  perhaps  true  where 
a  Proposal  form  is  used  which  provides  for  furnishing  a  Bond  and  for 
the  forfeiture  of  the  certified  check  in  case  the  Contractor  fails  to  sign 
the  Contract  and  furnish  a  satisfactory  Bond. 

Nevertheless  the  Bond  refers  to  a  Contract,  and  in  some  forms  (as  in 
the  Uniform  Contract  Form)  it  recites  the  date  of  the  Contract  to  more 
fully  identify  it.  Strictly,  the  Contract  must  be  executed  before  the  Bond ; 
otherwise  there  is  no  Contract  whose  performance  the  Bond  guarantees. 
It  becomes  then  a  suitable  provision  that  "  The  Contractor  agrees  at  the 
time  of  the  execution  and  delivery  of  this  contract,  and  before  the  taking 
effect  of  the  same  '  in  other  respects/  to  furnish,"  etc.  By  the  use  of  the 
words,  "  in  other  respects,"  there  remains  an  agreement,  namely  to  furnish 
the  Bond,  and  a  failure  to  do  so  would  justify  a  suit  for  damages  for  breach 
of  Contract.  For  the  agreement  to  furnish  the  Bond  there  is  ample  con- 
sideration, because  as  soon  as  the  Bond  is  furnished,  the  Company  is 
at  once  held  to  the  performance  of  its  part  of  the  Contract. 

In  some  cases  the  Bond  cannot  conveniently  be  furnished  at  the  time 
and  place  of  signing  the  Contract ;  in  such  cases  the  provision  above  ap- 
pears necessary. 

An  earlier  reading  was : 

A.  This  bond  shall  remain  in  force  and  effect  in  such  amount,  not  greater 
than  that  specified,  as  shall  be  determined  by  the  Chief  Engineer. 

Very  strictly  considered,  under  the  last  mentioned  reading,  the  failure 
of  a  Chief  Engineer  to  specify  any  amount  (a  case  of  neglect,  or  a  failure 
to  appreciate  the  necessity  for  such  action)  would  make  the  Bond  unen- 
forceable. It  is  doubtful,  however,  if  a  court  would  so  construe  it.  The 
reading  as  changed,  avoids  misunderstanding. 

It  has  been  suggested  also  that  there  be  added,  "  for  such  time  as  may 
be  specified  by  the  Chief  Engineer,"  with  the  purpose  of  having  the  Bond 


16-18  UNIFORM  CONTRACT  FORM 

released  as  soon  as  its  protection  is  no  longer  required.  It  is  probably 
true  that  anything  gained  in  this  way  by  reducing  the  fees  paid  to  the  surety 
company,  while  primarily  a  gain  to  the  Contractor,  will  in  the  long  run 
be  secured  to  the  Company. 

Workmen,  however,  and  perhaps  material  men  have  a  mechanic's  lien 
for  perhaps  three  months  after  the  completion  of  the  Contract,  and  a 
suit  for  damages  for  injury  to  person  or  property  may  be  possible  for  a 
much  longer  time,  and  the  protection  of  the  Bond  ought  to  cover  either 
of  these  contingencies.  Unless  a  time  limit  is  distinctly  specified,  the 
Bond  would  doubtless  be  effective  even  after  the  completion  of  the 
physical  parts  of  the  Contract,  if  properly  drawn.  It  is  the  common 
custom  now  that  surety  company's  fees  are  based  on  the  Contract  price 
and  without  a  time  limit,  and  in  such  case  there  will  be  no  saving  in  fees 
by  limiting  the  time  during  which  the  Bond  remains  in  force. 

A  much  more  elaborate  provision  is  the  following : 

B.  Simultaneously  with  the  execution  of  this  contract  the  Contractor  shall 
give  security  for  the  performance  of  his  obligation  by  filing  with  the  Comptroller 
a  bond  in  the  form  annexed  hereto,  entitled  "FORM  OF  CONTRACTOR'S 
BOND,"  executed  by  the  Contractor  and  by  two  or  more  sureties  to  be  corpora- 
tions or  persons  approved  by  the  Commission  in  the  sum  of  One  Hundred  Thousand 
Dollars  ($100,000).  In  case  any  of  the  sureties  upon  the  bond  shall  become  insol- 
vent or  unable  in  the  opinion  of  the  Commission  to  pay  promptly  the  amount  of 
such  bond  to  the  extent  to  which  such  surety  might  be  liable,  then  the  Contractor 
within  ten  (10)  days  after  notice  by  the  Commission  to  the  Contractor  shall,  by 
supplemental  bond  or  otherwise,  substitute  another  and  sufficient  surety  to  be 
approved  by  the  Commission  in  place  of  the  surety  so  insolvent  or  unable.  If  the 
Contractor  shall  fail,  within  such  ten  days  or  such  further  time,  if  any,  as  the  Com- 
mission may  grant,  to  substitute  another  and  sufficient  surety,  then  the  Contractor 
shall,  for  all  the  purposes  of  this  contract,  be  deemed  to  be  in  default  in  the  per- 
formance of  his  obligations  hereunder  and  upon  the  said  bond,  and  the  Commission 
may  terminate  this  contract  or  may  bring  any  proper  suit  or  proceeding  against  the 
Contractor  and  the  sureties,  or  either  of  them,  or  may  require  to  be  deducted  from 
any  moneys  then  in,  or  thereafter  coming  into,  the  hands  of  the  City  and  due  to  the 
Contractor  the  amount  for  which  the  surety  insolvent  or  unable  as  aforesaid  shall 
have  justified  on  the  bond ;  and  the  moneys  so  deducted  shall  be  held  by  the  Comp- 
troller as  collateral  security  for  the  performance  of  the  condition  of  the  bond. 

The  important  differences  are  the  provision  for  new  sureties  in  case 
the  original  sureties  shall  become  insolvent,  and  the  required  inclusion 
of  the  Contractor  as  one  of  the  parties  signing  the  bond.  The  form  is 
unusual  and  not  regarded  favorably  by  Contractors.  Proper  sureties 
should  be  secured  in  the  first  place. 

The  Public  Service  Commission  of  New  York  also  adds  a  provision 
by  which  the  Contractor : 


UNIFORM   CONTRACT  FORM  16-19 

C.  may  at  his  option  deposit an  equal  amount  of  cash  or  in  value 

of  securities. 

The  well-to-do  Contractor  who  owns  securities  may  thus  avoid  the 
payment  of  surety  company's  fees  and  may,  if  he  sees  fit,  give  to  the  City 
some  benefit  by  a  bid  lower  than  would  otherwise  be  made. 

A  form  used  in  another  City  reads : 

D.  The  Contractor  shall  give  to  the  City,  and  maintain  in  force  during  the 
continuance  of  this  contract,  a  surety  bond,  satisfactory  to  the  City,  in  the  sum  of 

dollars,  executed  by  authorized  surety,  guaranty,  or  trust 

company  or  companies. 

The  word  "  maintain  "  seems  to  have  some  value,  but  limiting  the  time 
to  "  during  the  continuance  of  this  contract  "  seems  undesirable  as  does 
also  a  further  provision  to  "  save  harmless  the  City  against  injuries  to 
persons  or  property  during  the  construction  of  said  work,  and  until  the 
same  is  accepted."  Does  the  Bond  save  harmless  the  City  until  the  work 
is  accepted,  or  for  "  injuries  to  persons  or  property  during  construction 
and  until  the  work  is  accepted  ?  "  The  court  will  doubtless  decide. 

An  alternate  reading  in  Section  1,  above,  instead  of  "in  form  and  sub- 
stance and  with  surety  thereon  satisfactory  "  may  be : 

E.  in  the  form  on  file  with  the  Chief  Engineer,  and  with  surety  thereon  satis- 
factory, etc. 

The  latter  form  is  better  calculated  to  secure  uniform  treatment  to 
all  bidders. 

The  form  of  Bond  is  the  subject  of  a  later  chapter. 

2.  CONTRACTOR'S  UNDERSTANDING.  It  is  understood  and  agreed 
that  the  Contractor  has,  by  careful  examination,  satisfied  himself  as  to  the 
nature  and  location  of  the  work,  the  conformation  of  the  ground,  the  character, 
quality  and  quantity  of  the  materials  to  be  encountered,  the  character  of  equip- 
ment and  facilities  needed  preliminary  to  and  during  the  prosecution  of  the 
work,  the  general  and  local  conditions,  and  all  other  matters  which  can  in  any 
way  affect  the  work  under  this  contract.  No  verbal  agreement  or  conversation 
with  any  officer,  agent  or  employe  of  the  Company,  either  before  or  after  the 
execution  of  this  contract,  shall  affect  or  modify  any  of  the  terms  or  obligations 
herein  contained. 

If,  in  some  cases,  the  Contractor  may  have  failed  to  satisfy  himself 
on  these  points,  his  signing  the  Contract  stops  him  from  later  making 
any  claim  of  failure  to  understand  conditions.  The  provision  that  no 
verbal  agreements  or  conversation  shall  modify  any  terms  or  obligations 
is  simply  a  reaffirmation  of  the  principles  of  the  Common  Law.  The 
statements  of  this  clause  here  seem  desirable,  as  the  Contractor  cannot 


16-20  UNIFORM   CONTRACT  FORM 

well  fail  to  understand  from  them  his  status  as  to  these  matters  under 
this  Contract.  Furthermore,  it  is  hardly  subject  to  the  criticism  made  of 
more  drastic  provisions  to  be  found  in  the  chapter  on  Specifications.  The 
word  "oral"  is  preferable  to  " verbal." 

There  are  other  readings  in  use,  but  the  above  seems  adequate. 

A  more  extensive  provision  in  use  in  Chicago  is  shown  below : 

A.  All  bidders  for  work  under  this  contract  are  required,  before  submitting 
proposals,  to  examine  the  site  of  the  work  and  adjacent  premises,  and  the  various 
means  of  approach  to  the  site,  and  to  make  all  necessary  investigations  in  order  to 
inform  themselves  thoroughly  as  to  the  character  and  magnitude  of  all  work  in- 
volved in  the  complete  execution  of  this  contract,  also  as  to  the  facilities  for  deliv- 
ering and  for  handling  material  and  plant  at  the  site  and  the  conditions  and  the 
difficulties  that  will  be  encountered  in  the  performance  of  the  work  specified  herein. 
No  plea  of  ignorance  of  conditions  that  exist,  or  that  may  hereafter  exist,  or  of 
difficulties  that  may  be  encountered  in  the  execution  of  the  work  hereunder,  as  a 
result  of  a  failure  to  make  the  necessary  examinations  and  investigations,  will  be 
accepted  as  a  sufficient  excuse  for  any  failure  or  omission  on  the  part  of  the  Contrac- 
tor to  fulfill  in  every  detail  all  of  the  requirements  of  this  contract,  or  will  be  ac- 
cepted as  a  basis  for  any  claims  whatsoever  for  extra  compensation. 

This  provision  is  more  commonly  found  in  the  Proposal  and  should 
occur  there  also,  but  it  is  well  to  have  it  within  the  body  of  the  Contract, 
so  that  in  case  of  a  suit  at  law,  the  Contract  shall  cover  the  points  involved 
without  reference  to  an  outside  document.  The  provision  in  the  Pro- 
posal may  state  that  the  bidder  has  also  examined  the  Specifications, 
plans  and  drawings,  which  is  hardly  necessary  here. 

In  some  Contracts  it  is  provided  that : 

B.  The  Information  for  Bidders  hereto  attached  and  the  Proposal  submitted 
by  the  Contractor  are  also  made  parts  of  this  Contract. 

It  seems  better  to  incorporate  in  the  Contract  such  features  from  the 
Information  for  Bidders  and  from  the  Proposal  as  are  necessary  to  a 
complete  Contract. 

3.  INTENT  OF  PLANS  AND  SPECIFICATIONS.  All  work  that  may 
be  called  for  in  the  specifications  and  not  shown  on  the  plans,  or  shown  on  the 
plans  and  not  called  for  in  the  specifications,  shall  be  executed  and  furnished 
by  the  Contractor  as  if  described  in  both  these  ways ;  and  should  any  work  or 
material  be  required  which  is  not  denoted  in  the  specifications  or  plans,  either 
directly  or  indirectly,  but  which  is  nevertheless  necessary  for  the  proper  carrying 
out  of  the  intent  thereof,  the  Contractor  is  to  understand  the  same  to  be  implied 
and  required,  and  shall  perform  all  such  work  and  furnish  any  such  material 
as  fully  as  if  they  were  particularly  delineated  or  described. 

This  section  seems  very  desirable.  It  calls  attention  to,  and  reaffirms 
the  principle  of  law  that  a  Contract  or  any  writing  is  to  be  construed 


UNIFORM   CONTRACT  FORM  16-21 

with  due  regard  to  all  its  parts,  none  of  which  is  to  be  neglected  in  deter- 
mining the  intent.  It  is  also  in  some  respects  more  explicit  than  the  pro- 
vision already  cited  that : 

A.  The  Contractor  shall  furnish  all  materials,  superintendence,  labor,  equip- 
ment, and  transportation,  except  as  hereinafter  specified,  and  shall  execute,  con- 
struct and  finish,  in  an  expeditious,  substantial,  and  workmanlike  manner,  to  the 
satisfaction  and  acceptance  of  the  Chief  Engineer  of  the  Company. 

Together  these  provisions  well  cover  the  requirements  in  case  there 
should  be  accidental  omissions  in  any  part  and  leave  little  opportunity 
for  misunderstanding  and  the  natural  sequence,  a  lawsuit. 

Other  readings  are : 

B.  The  plans  furnished  form  a  part  of  these  specifications,  and  any  work 
shown  thereon  shall  be  executed  the  same  as  if  mentioned  herein.     The  work  is 
to  be  made  complete,  and  to  the  satisfaction  of  the  Engineer,  notwithstanding  any 
minor  omissions  in  the  specifications  or  plans. 

C.  The  plans  and  specifications  are  intended  to  be  explanatory  of  each  other, 
but  should  any  discrepancy  appear  or  any  misunderstanding  arise  as  to  the  import 
of  anything  contained  in  either,  the  explanation  of  the  Chief  Engineer  shall  be 
final  and  binding  on  the  Contractor.    Any  correction  of  errors  or  omissions  in 
drawings  and  specifications  may  be  made  by  the  Chief  Engineer  when  such  correc- 
tion is  necessary  for  the  proper  fulfilment  of  their  intention  as  construed  by  him. 

Z).  Said  plans,  specifications  and  contract  are  to  be  considered  together,  so 
that  any  work  shown  on  the  plans,  though  not  mentioned  in  the  contract,  or  vice 
versa,  on  any  of  the  provisions  of  the  contract  not  repeated  in  the  plans,  or  vice 
versa,  are  to  be  executed  by  the  Contractor  as  part  of  this  contract.  ...  All 
things  which  in  the  opinion  of  the  Chief  Engineer  may  fairly  be  inferred  from  the 
contract  and  plans  are  to  be  executed  by  the  Contractor  as  part  of  the  contract. 

The  words  "  fairly  be  inferred  "  follow  good  practice. 

E.  The  work  done  and  materials  furnished  shall  be  strictly  pursuant  to  and  in 
conformity  with  the  specifications  and  plans,  which  plans  are  signed,  hereto  at- 
tached and  made  a  part  of  this  agreement.    The  said  specifications  and  plans  are 
intended  to  co-operate,  and  any  work  appearing  upon  the  plans  and  not  mentioned 
in  the  specifications  or  mentioned  in  the  specifications  and  not  appearing  upon  the 
plans,  shall  be  executed  according  to  the  true  intent  and  meaning  of  the  said  speci- 
fications and  plans,  the  same  as  though  the  said  work  was  contained  and  described 
in  both. 

F.  The  Engineer  shall  make  all  necessary  explanations  as  to  the  meaning 
and  intention  of  the  specifications,  shall  give  all  orders  and  directions  contemplated 
therein  or  thereby  and  in  every  case  in  which  a  difficult  or  unforeseen  condition 
shall  arise,  in  the  performance  of  the  work  required  by  this  contract. 

G.  It  is  expressly  understood  that  the  specifications  do  not  include  all  require- 
ments, but  are  requirements  in  addition  to  those  heretofore  or  elsewhere  given  or 


16-22  UNIFORM   CONTRACT  FORM 

provided  in  this  contract.  The  specifications  and  other  provisions  of  this  contract, 
and  the  contract  drawings,  are  intended  to  be  explanatory  of  each  other.  Should, 
however,  any  discrepancy  appear  or  any  misunderstanding  arise  as  to  the  import 
of  anything  contained  in  either,  the  explanation  of  the  Engineer  shall  be  final  and 
conclusive. 

A  provision  of  the  following  kind  is  sometimes  used : 

H.  The  matter  contained  in  the  Information  for  Bidders,  in  the  Proposal  and 
Bid,  in  the  Specifications  and  in  the  contract  drawings,  are  hereby  incorporated  in 
and  made  a  part  of  this  contract  to  the  same  extent  as  if  they  were  herein  written. 

I.  The  Legal  Notice,  Instruction  to  Bidders,  Proposal  of  the  Bidder,  and  the 
Specifications,  all  of  which  are  hereto  attached,  are  hereby  made  a  part  of  this 
agreement  the  same  as  if  they  were  herein  written ;  the  drawings  for  the  work  to  be 
done  under  this  agreement,  on  file  in  the  Department  of  Public  Service,  Office  of 
the  City  Engineer,  are  also  hereby  incorporated  in  and  made  a  part  of  this  agree- 
ment. 

Such  a  provision  seems  unnecessary  if  the  Contract  covers  all  requisite 
features  included  in  these  other  documents.  The  Contract  should  be 
made  complete  in  itself  so  far  as  possible. 

An  addition  to  the  clauses  already  considered  is  in  good  use  and  is 
shown  below : 

J.  All  things  which  in  the  opinion  of  the  Chief  Engineer  may  fairly  be  inferred 
from  the  contract  and  plans  are  to  be  executed  by  the  Contractor  as  a  part  of  the 
contract ;  and  the  Chief  Engineer  shall  be  the  sole  judge  as  to  whether  the  detail 
plans  conform  to  the  general  plans  and  contract. 

Both  of  these  provisions  may  hold  good,  but  the  Courts  are  slow  to 
allow  their  powers  to  be  taken  away  so  far  as  the  interpretation  of  any 
writing  is  involved.  Where  the  exercise  of  expert  knowledge  is  required, 
the  courts  would  probably  support  the  provision  that  the  Chief  Engineer's 
expert  judgment  should  prevail.  The  comments  on  Section  26  should 
be  read  to  correctly  appreciate  this. 

Another  clause  sometimes  added  is : 

K.  The  work  is  to  be  made  complete,  and  to  the  satisfaction  of  the  Chief 
Engineer,  notwithstanding  any  minor  omissions  in  the  specifications  or  plans. 

4.  PERMITS.  Permits  of  a  temporary  nature  necessary  for  the  prosecu- 
tion of  the  work  shall  be  secured  by  the  Contractor.  Permits  for  permanent 
structures  or  permanent  changes  in  existing  facilities  shall  be  secured  by  the 
Company. 

This  appears  to  be  an  unusual  provision  in  a  Contract,  but  it  seems  very 
desirable.  The  Contractor  should  secure  permits  necessary  to  him  for 
carrying  on  the  work ;  the  Company  should  secure  all  lands,  or  rights  of 


UNIFORM   CONTRACT  FORM  16-23 

way,  or  licenses  necessary  for  the  use  of  the  work  when  completed.    The 
distribution  of  duties  is  reasonable  and  proper. 
It  is  provided  in  another  Contract  form : 

A.  The  Contractor  shall  also  procure  and  pay  for  all  licenses  or  permits  re- 
quired in  the  prosecution  of  any  part  of  the  work  embraced  in  this  Contract. 

This  appears  not  to  be  so  clear  as  Section  4,  above  quoted. 
And  in  another : 

B.  The  Contractor  shall  fully  comply  with  all  municipal  ordinances  and  regu- 
lations, and  obtain  all  required  licenses  and  permits,  and  pay  all  charges  and  ex- 
penses connected  therewith. 

In  many  classes  of  work  within  a  city,  the  requirements  as  to  permits 
need  to  be  well  understood;  they  are  sometimes  many  in  number  and 
some  requirements  may  be  very  technical  as  to  fulfilment.  In  the  erec- 
tion of  buildings  or  in  the  building  of  sewers,  the  requirements  of  ordi- 
nances or  rules  of  street  or  building  departments  must  be  complied  with. 

5.  PROTECTION.  Whenever  the  local  conditions,  laws  or  ordinances 
require,  the  Contractor  shall  furnish  and  maintain,  at  his  own  cost  and  expense, 
necessary  passageways,  guard  fences  and  lights  and  such  other  facilities  and 
means  of  protection  as  may  be  required. 

i 

This  also  seems  specific  and  desirable  although  not  found  in  most 
Contract  forms.  It  differs  materially  from  a  provision  to  hold  the  Com- 
pany harmless  in  case  any  damage  or  an  injury  is  incurred ;  it  is  provision 
to  guard  against  damage  to  any  interests,  or  against  violation  of  statutes 
or  ordinances ;  it  is  in  the  nature  of  a  preventive  rather  than  a  remedy. 
This  involves  compliance  with  Statute  Law  and  with  the  particular  re- 
quirements thereof ;  guard  fences,  lights,  and  various  kinds  of  protection 
are,  however,  required  by  the  Common  Law,  to  escape  a  charge  of  negli- 
gence. Under  ordinances,  etc.,  however,  the  specific  requirements  or 
regulations  must  be  observed  as  laid  down  by  any  public  authority. 

The  following  clauses  are  taken  from  existing  Contract  forms : 

A.  The  Contractor  shall  take  whatever  precautions  may  be  necessary  to 
render  any  portion  of  the  work  secure  in  any  respect,  or  to  decrease  the  liability 
of  accident  from  any  cause,  or  to  avoid  contingencies  which  are  liable  to  delay  the 
completion  of  the  work. 

B.  The  Contractor  shall  furnish  and  maintain,  subject  to  the  approval  of  the 
Engineer,  all  barricades  and  other  protections,  lights  and  signs,  necessary  for  the 
proper  protection  of  the  public.     He  shall  also  furnish  the  services  of  watchmen. 
The  cost  of  all  the  above  shall  be  covered  by  the  amounts  paid  at  the  rates  and 
prices  herein  specified,  and  no  extra  charge  will  be  made  therefor. 


16-24  UNIFORM   CONTRACT  FORM 

C.  The  trench  and  work  shall  be  properly  lighted  at  night  by  the  Contractor, 
who  shall  provide  at  his  own  expense  watchmen,  lights,  etc.,  and  take  such  pre- 
cautions generally  as  may  be  necessary  to  prevent  accidents  and  to  protect  life  and 
property. 

6.  RIGHTS  OF  VARIOUS  INTERESTS.  Wherever  work  being  done  by 
Company  forces  or  by  other  contractors  is  contiguous  to  work  covered  by  this 
contract,  the  respective  rights  of  the  various  interests  involved  shall  be  estab- 
lished by  the  Engineer,  to  secure  the  completion  of  the  various  portions  of  the 
work  in  general  harmony. 

Attention  should  be  called  here  to  Section  24  which  defines  Chief 
Engineer  and  Engineer.  It  is  here  provided  that  the  Engineer  on  the 
ground  shall  settle  this  matter,  which  is  the  proper  arrangement.  Appeal 
to  the  Chief  Engineer  is,  or  may  be,  provided  for. 

In  many  classes  of  Contract  work,  there  will  be  no  opportunity  for  con- 
flict of  rights  and  this  section  may  then  be  omitted.  In  railroad  work  and 
in  the  construction  of  buildings  this  will  often  be  a  necessary  provision. 

Other  forms  are : 

A.  The  other  Contractors  of  the  Commission  may  also,  for  all  the  purposes 
which  may  be  required  by  their  contracts  or  work,  enter  upon  the  work  and  prem- 
ises used  by  the  Contractor.     Any  differences  or  conflicts  which  may  arise  be- 
tween the  Contractor  and  other  contractors  of  the  Commission  in  regard  to  their 
work  shall  be  adjusted  and  determined  by  the  Engineer. 

B.  On  the  division  line  of  contiguous  contract  sections,  the  Engineer  will 
decide  any  matters  in  the  details  of  construction  within  a  limit  of  seventy-five 
feet  on  either  side  of  the  line  where  the  work  of  contractors  may  be  in  conflict, 
and  direct  which  of  the  contractors  shall  complete  the  details  of  construction 
within  such  limits. 

C.  During  the  progress  of  the  work  it  will  be  necessary  for  other  contractors 
and  persons  to  do  work  in  or  about  the  construction  or  equipment  of  the  Railroad. 
The  Contractor  shall  afford  to  such  other  contractors  or  persons  such  facilities 
as  the  Engineer  may  require. 

Any  difference  or  conflicts  which  may  arise  between  the  Contractor  and  other 
contractors  of  the  Commission  in  connection  with  the  construction  of  the  Railroad 
or  otherwise  in  connection  with  the  equipment  of  the  Railroad  in  regard  to  the 
progress  of,  or  the  facilities  afforded  with  respect  to,  their  work  shall  be  adjusted 
and  determined  by  the  Engineer. 

The  provisions  of  Section  6  ought  to  be  of  interest  to  Architects.  In 
constructing  a  house,  plumbing,  heating,  wiring,  and  various  classes  of 
work  are  often  done  under  separate  Contracts. 

7.  CONSENT  TO  TRANSFER.  The  Contractor  shall  not  let  or  transfer 
this  contract  or  any  part  thereof  (except  for  the  delivery  of  material)  without 


UNIFORM   CONTRACT   FORM  16-25 

consent  of  the  Chief  Engineer,  given  in  writing.  Such  consent  does  not  release 
or  relieve  the  Contractor  from  any  of  his  obligations  and  liabilities  under  the 
contract. 

Other  readings  in  whole  or  in  part  are : 

A.  The  Contractor  shall  not  sub-let  or  assign,  by  power  of  attorney  or  other- 
wise, any  part  or  the  whole  of  the  work  embraced  in  this  contract,  without  the 
approval  of  the  Commission. 

B.  The  Contractor  shall  give  his  personal  attention  constantly  to  the  faith- 
ful prosecution  of  the  work,  and  shall  not  assign,  sublet,  or  transfer,  to  any  person 
or  persons,  this  contract  or  any  of  the  work  hereby  agreed  to  be  performed,  or  any 
of  the  moneys  falling  due  or  to  become  due  under  this  contract;    and  shall  not 
issue  any  orders  or  drafts  on  the  City  for  any  moneys  due  or  to  grow  due  under  this 
contract,  unless  by  and  with  the  consent  of  the  Board,  first  duly  had  by  resolution 
and  entered  upon  the  minutes  of  the  Board,  and  agrees  that  no  person  other  than 
the  party  signing  this  agreement  as  Contractor  shall  have  any  claim  thereunder. 

C.  The  Contractor  shall  give  his  personal  attention  constantly  to  the  faithful 
prosecution  of  the  work,  shall  keep  the  same  under  his  personal  control,  and  shall 
not  assign  by  power  of  attorney,  or  otherwise,  nor  sublet  the  work,  or  any  part 
thereof,  without  the  previous  written  consent  of  the  Commission,  and  shall  not, 
either  legally  or  equitably,  assign  any  of  the  moneys  payable  under  this  agree- 
ment, or  his  claim  thereto,  unless  with  the  like  consent  of  the  Commission. 

D.  Unless  by  the  previous  consent  of  the  Board,  to  be  signified  by  indorse- 
ment on  this  agreement. 

E.  No  part  of  this  work  shall  be  sublet  except  to  parties  skilled  in  and  properly 
equipped  for  the  same  and  satisfactory  to  the  Board. 

F.  The  Contractor  shall  give  his  personal  attention  constantly  to  the  faithful 
prosecution  of  the  work,  and  shall  be  present,  either  in  person  or  by  a  duly  author- 
ized representative,  on  the  site  of  the  work,  continually  during  its  progress  to  re- 
ceive direction  or  instructions  from  the  Engineer;    he  shall  not  assign,  transfer, 
convey,  sublet  or  otherwise  dispose  of  this  contract,  or  his  right,  title  or  interest 
in  or  to  the  same  or  any  part  thereof,  without  the  previous  consent  in  writing  of 
the  Board  indorsed  herein  or  hereto  attached ;  and  he  shall  not  assign  by  power  of 
attorney  or  otherwise  any  of  the  moneys  to  become  due  or  payable  under  this 
contract  unless  by  and  with  the  like  consent  signified  in  like  manner.    If  the  con- 
tractor shall  without  such  previous  written  consent,  assign,  .  .  .  this  contract 
may  at  the  option  of  the  Board,  be  revoked  and  annulled,  and  the  City  shall  there- 
upon be  relieved  and  discharged  from  any  liability  and  obligations  growing  out 
of  the  same  to  the  contractor. 

G.  If  the  Contractor  shall  cause  any  part  of  this  contract  to  be  performed  by 
a  sub-contractor,  the  provisions  of  this  contract  shall  apply  to  such  sub-contrac- 
tor and  his  officers,  agents  and  employees  hi  all  respects,  as  if  he  and  they  were 
employees  of  the  Contractor;    and  the  Contractor  shall  not  be  in  any  manner 
thereby  discharged  from  his  obligations  and  liabilities  hereunder,  but  shall  be 
liable  hereunder  for  all  acts  and  negligence  of  the  sub-contractor,  his  officers, 


16-26  UNIFORM  CONTRACT  FORM 

agents  and  employees  as  if  they  were  employees  of  the  Contractor.  The  em- 
ployees of  the  sub-contractor  shall  be  subject  to  the  same  provisions  hereof  as 
employees  of  the  Contractor;  and  the  work  or  materials  furnished  by  the  sub- 
contractor shall  be  subject  to  the  provisions  hereof,  as  if  furnished  directly  by  the 
Contractor. 

H.  No  part  of  this  work  shall  be  sublet  except  to  parties  skilled  in  and  prop- 
erly equipped  for  the  same  and  assented  to  hi  writing  by  the  Board  before  such 
part  of  the  work  is  begun. 

Most  Contracts  forbid  subletting.  A  large  proportion  of  such  Con- 
tracts are  sublet  in  part  or  in  whole  without  the  consent  of  the  other  party. 
Under  such  circumstances,  the  legal  effect  of  such  a  provision  forbidding 
subletting  is  that  the  sub-contractor  acquires  no  legal  rights  under  the  sub- 
contract or  assignment,  is  not  recognized,  and  has  no  standing  with  the 
Company,  City,  or  Board;  he  is  treated  as  a  foreman,  the  Contractor 
proper  being  the  only  recognized  responsible  party. 

It  is  important,  however,  that  there  should  be  no  official  recognition 
of  the  sub-contractor  by  the  Chief  Engineer  in  any  way.  Furnishing 
estimates  of  the  work  done  by  the  sub-contractor  has  been  held  to  be  a 
recognition  which  amounted  to  a  waiver  of  the  condition;  the  Chief 
Engineer  or  other  person  of  the  Board  whose  written  consent  is  specified 
must  be  a  party  to  the  recognition. 

If  the  Engineer,  without  the  knowledge  of  the  Chief  Engineer,  should 
furnish  such  an  estimate,  or  otherwise  recognize  the  sub-contractor,  this 
could  hardly  operate  as  a  waiver;  the  Engineer's  authority  would  not 
reach  that  far. 

No  harm  results  in  most  classes  of  work  if  there  is  an  informal  sublet- 
ting. In  a  small  proportion  of  Contract  work,  there  is  necessity  for  the 
personal  attention,  constantly,  of  a  Contractor  specially  skilled  in  that 
work,  and  in  this  case  a  drastic  provision  should  have  place  in  the  Contract, 
calling  for  the  annulment  of  the  contract  for  violation  of  this  provision. 
For  most  Contracts,  Section  7,  above,  seems  sufficient,  and  free  from  un- 
due verbiage.  When  written  consent  is  required,  the  Chief  Engineer 
seems  the  proper  representative  of  a  railroad  Company;  in  other  cases 
the  Commission  or  Board ;  in  the  case  of  a  City,  in  general  the  officer  or 
Board  which  signs  the  Contract  in  behalf  of  the  City. 

8.  SUPERINTENDENCE.  The  Contractor  shall  constantly  superintend 
all  the  work  embraced  in  this  contract,  in  person  or  by  a  duly  authorized 
manager  acceptable  to  the  Company. 

This  section  seems  properly  put  here.  Many  Contractors  nowadays 
are  carrying  on  work  in  many  places,  and  much  in  the  way  of  direct 
personal  attention  is  not  to  be  expected,  especially  if  competent  "  man- 


UNIFORM   CONTRACT  FORM  16-27 

agers  "  are  employed ;  if  not  expected,  it  ought  not  to  be  asked  for  in  the 
Contract.  In  the  small  proportion  of  cases  where  the  personal  element 
is  essential,  the  clause  may  well  read  : 

A.  This  contract  specially  demands  the  constant  attention  of  the  Contractor 
hi  person  in  addition  to  such  other  superintendents  and  foremen  as  the  work  may 
demand. 

Under  comments  on  Section  7,  are  other  readings  which  cover  this 
feature. 

The  two  clauses  following  are  also  in  point  here : 

B.  The  Contractor  shall  be  responsible  for  the  entire  work  until  completed 
and  accepted  by  the  Board.    The  Contractor  will  be  required  to  give  his  personal 
attention  to  the  fulfillment  of  this  contract  and  to  the  execution  of  the  work. 
He  shall  keep  the  entire  work  under  his  control,  and  shall  not  sublet  all  or  any 
part  of  it. 

The  Contractor  shall  at  all  times  have  a  competent  foreman,  superintendent 
or  other  representative  on  the  work,  who  shall  have  authority  to  receive  and  exe- 
cute orders  from  the  Engineer,  who  shall  receive  shipments  of  material  to  the 
Contractor,  and  who  shall  see  that  the  work  is  executed  in  accordance  with  the 
specifications  and  plans  and  the  orders  of  the  Engineer  thereunder.  The  Contrac- 
tor shall  see  that  the  different  parts  of  the  work  are  brought  together  hi  harmony 
and  he  shall  cooperate  with  other  contractors  and  with  the  Engineer  as  to  the 
proper  conduct  of  the  work. 

Other  readings  are : 

C.  The  Contractor  shall  give  his  personal  attention  constantly  to  the  faith- 
ful prosecution  of  the  work  and  shall  be  present,  either  in  person  or  by  a  duly 
authorized  representative,  on  the  site  of  the  work,  continually  during  its  progress, 
to  receive  directions  or  instructions  from  the  Engineer.     He  shall  maintain  an 
office  on  the  site  of  the  work,  where  copies  of  the  contract  and  of  all  working  draw- 
ings shall  be  kept  ready  at  any  tune. 

The  last  clause  would  be  inappropriate  in  many  small  Contracts. 

D.  During  the  performance  of  any  work  on  the  premises  or  public  streets  of 
the  City,  the  Contractor  shall  keep  on  the  ground  an  experienced  representative 
or  superintendent,  duly  authorized  to  represent  and  act  for  the  Contractor  hi  all 
matters  pertaining  to  the  work  to  be  done  under  this  contract. 

When  it  is  found  necessary  to  give  directions  during  the  absence  of  the  Con- 
tractor at  any  time  during  the  progress  of  the  work  herein  specified,  orders  given 
by  the  Commissioner  shall  be  received  and  obeyed  by  the  foreman  or  superintend- 
ent having  charge  of  the  work  about  which  orders  or  directions  are  given. 

E.  The  Contractor  must  have  on  the  work  at  all  times  a  foreman,  superin- 
tendent, or  other  competent  representative,  to  whom  orders  and  instructions  may 
be  given,  his  name  to  be  certified  by  the  Contractor  to  the  Engineer.    Any  orders 
given  such  foreman,  superintendent  or  representative  shall  have  the  same  force 
and  effect  as  if  given  directly  to  the  Contractor. 


16-28  UNIFORM   CONTRACT  FORM 

F.  The  Contractor  shall  have  a  representative  on  the  work  at  all  times  who 
shall  have  authority  to  act  upon  the  orders  or  the  directions  of  the  Engineer. 

G.  The  Contractor  shall  employ  suitable  superintendents  and  foremen  who 
shall  be  present  while  any  work  is  being  done  under  this  contract. 

The  reading  given  in  Section  8  above,  is  concise  and  to  the  point. 

9.  TIMELY  DEMAND  FOR  POINTS  AND  INSTRUCTIONS.  The 
Contractor  shall  provide  reasonable  and  necessary  opportunities  and  facilities 
for  setting  points  and  making  measurements.  He  shall  not  proceed  until  he 
has  made  timely  demand  upon  the  Engineer  for,  and  has  received  from  him, 
such  points  and  instructions  as  may  be  necessary  as  the  work  progresses. 
The  work  shall  be  done  in  strict  conformity  with  such  points  and  instructions. 

This  section,  while  it  appears  not  to  be  in  common  use  in  other  Con- 
tract forms,  seems  very  much  to  the  point.  It  does  appear  to  be  covered 
in  most  part  in  the  following : 

A.  All  lines  and  grades  will  be  given  by  the  Engineer,  but  the  Contractor 
shall  provide  such  materials  and  give  such  assistance  as  may  be  required  by  the 
Engineer,  and  the  marks  given  shall  be  preserved.    The  Contractor  shall  keep 
the  Engineer  informed  a  reasonable  time  in  advance,  of  the  times  and  places  at 
which  he  intends  to  work,  in  order  that  lines  and  grades  may  be  furnished  and 
necessary  measurements  for  record  and  payment  may  be  made  with  the  minimum 
of  inconvenience  to  the  Engineer  or  of  delay  to  the  Contractor. 

There  is  some  question  whether  the  Contractor  should  be  required  to 
furnish  stakes  and  labor  to  assist  the  Engineer  in  staking  out  the  work. 
It  is  not  properly  the  Contractor's  business  to  do  so. 

The  following  clause  covers  some  of  the  requisite  features  as  to  lines 
and  grades : 

B.  All  work  provided  for  under  this  contract  shall  be  done  under  the  direction 
and  supervision  of  the  Engineer  and  his  properly  authorized  agents.    The  Con- 
tractor shall  be  guided  by  all  lines,  stakes,  marks  and  grades  given  by  them,  and 
shall  carefully  preserve  the  same  as  far  as  possible  during  the  progress  of  the  work, 
and  shall  furnish  all  needed  facilities  without  extra  charge  therefor,  to  enable  the 
Engineer  to  properly  give  any  required  lines  and  grades  and  measure  the  work 
from  time  to  time. 

The  two  provisions  following  are  parts  of  one  Contract : 

C.  During  the  progress  of  the  work  the  Commission  will  give,  through  the 
Engineer,  to  the  Contractor,  suitable  points,  marks  or  benches,  indicating  the  line 
and  grade  of  the  Railroad  and  of  the  sewers ;    such  points  or  bench  marks  to  be 
established  at  such  intervals  as  the  Engineer  deems  necessary  for  the  Contractor 
to  be  able  to  perform  his  work.     The  principal  lines  and  grades  are  to  be  given 
by  the  Engineer,  who  may  change  them  from  time  to  time  as  may  be  authorized 
and  directed  by  the  Commission.    The  stakes  and  marks  given  by  the  Engineer 


UNIFORM   CONTRACT  FORM  16—29 

shall  be  carefully  preserved  by  the  Contractor,  who  shall  give  to  the  Engineer 
all  necessary  assistance  and  facilities  for  establishing  benches  and  plugs  and  for 
making  measurements. 

D.  Before  commencing  work  on  any  part  of  the  route,  the  Contractor  shall 
give  notice  in  writing  to  the  Engineer  at  least  one  (1)  week  in  advance  of  his  in- 
tention to  commence  such  operation;    and  before  commencing  manufacture,  or 
resuming  manufacture,  if  the  same  has  been  suspended,  of  any  article  called  for 
by  these  specifications,  notice  shall  be  given  to  the  Engineer  in  writing  at  least 
one  (1)  week  in  advance,  with  the  name  and  address  of  the  maker  and  the  amount 
and  description  of  the  material  to  be  manufactured. 

One  Contract  form  provides : 

E.  No  special  compensation  shall  be  made  for  the  cost  to  the  Contractor  of 
any  of  the  work  or  delay  occasioned  by  giving  lines  and  grades,  or  making  other 
necessary  measurements,  or  by  inspection ;   but  compensation  shall  be  considered 
to  have  been  included  in  the  prices  stipulated  for  the  appropriate  items. 

This  makes  the  matter  very  clear  but  is  probably  unnecessary;  it 
apparently  is  sufficiently  covered  by  Section  3.  Some  Engineers  may 
nevertheless  prefer  to  include  it.  The  delay  referred  to  is  the  necessary 
interference  to  work  while  giving  lines  and  grades.  There  should  be  no 
delay  to  the  Contractor  in  waiting  for  lines  and  grades.  The  Contractor 
has  a  moral  right  to  every  reasonable  facility  to  allow  his  doing  the  work 
in  the  most  advantageous  manner. 

10.  REPORT  ERRORS  AND  DISCREPANCIES.  If  the  Contractor, 
in  the  course  of  the  work,  finds  any  discrepancy  between  the  plans  and  the 
physical  conditions  of  the  locality,  or  any  errors  on  plans  or  in  the  layout  as 
given  by  said  points  and  instructions,  it  shall  be  his  duty  to  immediately  inform 
the  Engineer,  in  writing,  and  the  Engineer  shall  promptly  verify  the  same. 
Any  work  done  after  such  discovery,  until  authorized,  will  be  done  at  the 
Contractor's  risk. 

This  does  not  say  that,  if  there  is  any  discrepancy,  the  Contractor 
must  find  it;  it  says  if  he  finds  any  discrepancy.  This  demands  of  the 
Contractor  that  he  shall  work  with  the  Company  for  the  best  conduct  of 
the  work.  As  a  matter  of  evidence,  it  might  be  difficult  to  provide  that 
a  Contractor  did  find  any  discrepancy,  unless  it  was  also  known  to  the 
Engineer  or  some  of  his  subordinates.  Nevertheless  in  some  cases  evi- 
dence would  be  available  and  this  section  seems  worth  while.  The  impli- 
cation is  that  work  done  before  notice  of  error  is  not  at  the  Contractor's 
risk,  which  is  right  and  proper. 

The  wording  in  one  case  is  this : 

A.  The  Contractor  shall  promptly  report  to  the  Engineer,  in  writing,  any 
discrepancy  or  error  which  he  may  discover  in  the  plans,  drawings,  specifications 
or  contract. 


16-30  UNIFORM  CONTRACT  FORM 

Other  forms  are : 

B.  Any  correction  or  errors  or  omissions  in  plans  and  specifications  may  be 
made  by  the  Chief  Engineer  when  such  correction  is  necessary  for  the  proper 
fulfilment  of  their  intention  as  construed  by  him. 

Possibly  the  two  clauses  following  belong  with  Section  3  rather  than 
here. 

C.  The  Contractor  is  required  to  check  all  dimensions  and  quantities  on  the 
drawings  or  schedules  given  to  him  by  the  Engineer,  and  shall  notify  the  Engineer 
of  all  errors  therein  which  he  may  discover  by  such  examination  and  checking. 
He  will  not  be  allowed  to  take  advantage  of  any  error  or  omission  in  these  speci- 
fications, as  full  instructions  will  be  furnished  by  the  Engineer  should  such  error 
or  omission  be  discovered,  and  the  Contractor  shall  carry  out  such  instructions  as 
if  originally  specified. 

D.  The  aforesaid  plans,  and  the  surveys  with  the  calculations  based  thereon, 
are  believed  to  be  correct ;    but  the  Contractor  must  examine  for  himself,  as  no 
allowance  will  be  made  for  any  errors  or  inaccuracies  which  may  be  found  therein, 
and  the  Commonwealth  does  not  guarantee  them  to  be  even  approximately  correct. 

It  seems  to  be  unfair  to  the  Contractor  to  require  him  to  stand  re- 
sponsible for  errors  made  by  the  Engineer's  draftsmen;  the  Contractor 
ordinarily  has  no  special  facilities  for  verification.  In  the  case  of  bridge 
or  other  structural  plans,  the  Bridge  Company  has  unusual  facilities  to  do 
checking  and  the  clause  in  this  case  seems  defensible  and  probably  wise. 
It  may  be  proper  in  other  specific  cases ;  for  the  general  run  of  Contracts, 
it  is  not  fair  to  the  Contractor. 

The  following  provision  is  along  the  same  general  lines  and  seems  reason- 
able. The  Engineer  who  finds  his  own  errors  has  here  authority  to  correct 
them,  and  evidently  under  this  provision  the  Contractor  is  not  to  be  held 
responsible  for  work  done  before  the  errors  are  discovered  and  corrected. 

E.  The  Engineer  shall  have  the  right  to  correct  any  errors  or  omissions  in  the 
contract  or  specifications  when  such  corrections  are  necessary  for  the  proper  ful- 
filment of  their  intention.     The  action  of  such  corrections  shall  date  from  the  time 
that  the  Engineer  gives  due  notice  thereof,  and  any  alterations  hi  the  work,  ren- 
dered necessary  thereby,  shall  be  made  as  directed. 

11.  PRESERVATION  OF  STAKES.  The  Contractor  must  carefully 
preserve  bench  marks,  reference  points  and  stakes,  and  in  case  of  wilful  or 
careless  destruction,  he  will  be  charged  with  the  resulting  expense  and  shall 
be  responsible  for  any  mistakes  that  may  be  caused  by  their  unnecessary  loss 
or  disturbance. 

This  seems  an  excellent  provision,  although  omitted  in  many  Contract 
forms.  Several  forms  of  provision  as  to  this  have  been  given  in  the  com- 
ments upon  Section  9. 


UNIFORM  CONTRACT  FORM  16-31 

Sections  12  and  13  may  well  be  considered  together. 

12.  INSPECTION.    All  work  and  material  shall  be  at  all  times  open  to 
the  inspection,  acceptance,  or  rejection  of  the  Engineer  or  his  duly  authorized 
representative.    The  Contractor  shall  give  the  Engineer  reasonable  notice 
of  starting  any  new  work  and  shall  provide  reasonable  and  necessary  facilities 
for  inspection,  even  to  the  extent  of  taking  out  portions  of  finished  work ; 
in  case  the  work  is  found  satisfactory,  the  cost  of  taking  out  and  replacement 
will  be  paid  by  the  Company.    No  work  shall  be  done  at  night  without  the 
previous  approval  of  the  Engineer. 

13.  DEFECTIVE  WORK  OR  MATERIAL.    Any  omission  or  failure  on 
the  part  of  the  Engineer  to  disapprove  or  reject  any  work  or  material  shall  not 
be  construed  to  be  an  acceptance  of  any  defective  work  or  material.    The 
Contractor  shall  remove,  at  his  own  expense,  any  work  or  material  condemned 
by  the  Engineer,  and  shall  rebuild  and  replace  the  same  without  extra  charge, 
and  in  default  thereof  the  same  may  be  done  by  the  Company  at  the  Contrac- 
tor's expense,  or,  in  case  the  Chief  Engineer  should  not  consider  the  defect 
of  sufficient  importance  to  require  the  Contractor  to  rebuild  or  replace  any  im- 
perfect work  or  material,  he  shall  have  power,  and  is  hereby  authorized,  to  make 
an  equitable  deduction  from  the  stipulated  price. 

The  features  of  special  importance  in  Section  12  are  the  requirements 
of  notice  to  the  Engineer  before  starting  any  new  work,  of  his  approval 
of  night  work,  and  the  statement  that  work  may  be  taken  out  for  purposes 
of  inspection. 

The  unusual  feature  of  Section  13  is  the  authority  to  make  a  deduction 
from  the  stipulated  price  in  the  case  of  defective  work  not  sufficiently  bad 
to  require  removal  and  renewal.  If  properly  carried  out,  this  provision 
will  operate  to  the  advantage  of  the  Contractor.  The  work  of  a  well  in- 
tentioned  Contractor  will  sometimes  fall  below  standard,  and  it  is  not 
always  necessary  to  discipline  him  to  the  extent  of  requiring  removal  of 
work. 

The  question  may  arise  as  to  what  is  an  equitable  deduction.  One 
answer  might  be,  "  the  damage  resulting."  If  the  structure  or  work 
answers  the  purpose,  is  there  appreciable  damage?  Another  answer  is, 
"  the  difference  in  cost,  or  price,  or  value,  between  the  work  as  executed 
and  as  specified."  The  latter  is  the  more  suitable  answer.  In  public 
work,  the  acceptance  of  work  below  standard  at  full  price  is  unfair  to 
other  bidders  and  in  its  essence  illegal.  It  also  substantially  puts  a  pre- 
mium on  doing  imperfect  work.  It  opens  the  way  to  graft,  and  it  doubt- 
less is  a  means  by  which  graft  is  often  practiced.  There  seems  no  reason 
why  the  provision  above  should  not  be  workable  practically. 

The  clause  that  "  any  omission  or  failure  on  the  part  of  the  Engineer 
to  disapprove  or  reject  any  work  or  material  shall  not  be  construed  to  be 


16-32  UNIFORM   CONTRACT  FORM 

an  acceptance  of  any  defective  work  or  material"  seems  somewhat  severe 
upon  the  Contractor.  The  courts  can  be  expected  to  sustain  it  and  there 
is  an  evident  disposition  to  include  such  a  clause  in  Contracts.  The  fol- 
lowing quotations  in  various  forms,  indicate  that  this  disposition  is  clearly 
a  fact : 

A.  Any  omission  to  disapprove  the  work  at  the  time  or  inspection  or  at  the 
time  of  any  monthly  or  other  estimate  shall  not  relieve  the  Contractor  of  any  of 
his  obligations. 

B.  It  is  further  agreed  that  the  approval  of  the  said  Engineer  or  his  assistants, 
of  all  or  any  of  the  work  during  its  construction,  shall  not  relieve  the  Contractor 
from  the  full  responsibility  of  building  and  furnishing  the  work  required  by  the 
condition  of  this  agreement,  and  it  is  understood  that  no  advantage  shall  be  taken 
of  any  discrepancy  that  may  be  found  in  any  drawing  or  specification. 

C.  If  the  inspector  should  be  absent  or  negligent,  or  should  consent  to  the 
allowance  of  inferior  work,  the  Contractor  will  not  thereby  be  excused  from  re- 
pairing the  work  and  removing  faulty  materials  at  his  own  cost.    The  Contractor 
shall  at  all  times  furnish  the  Engineer  reasonable  notice  for  the  purpose  of  in- 
specting the  materials  furnished  and  the  work  done  under  this  agreement. 

D.  The  inspection  of  the  work  shall  not  relieve  the  Contractor  of  any  of  his 
obligations  to  fulfill  his  contract  as  herein  prescribed,  and  defective  work  shall 
be  made  good,  and  unsuitable  materials  may  be  rejected,  notwithstanding  that 
such  work  and  materials  have  been  previously  overlooked  by  the  City  and  accepted 
or  estimated  for  payment.     If  the  work,  or  any  part  thereof,  shall  be  found  defec- 
tive before  the  final  acceptance  of  the  whole  work  the  Contractor  shall  forthwith 
make  good  such  defect  without  compensation,  in  a  manner  satisfactory  to  the 
City,  and  if  any  materials  brought  upon  the  ground  for  use  in  the  work,  or  selected 
for  same,  shall  be  condemned  by  the  City  as  unsuitable  or  not  hi  conformity  with 
the  specifications,  the   Contractor  shall  forthwith  discard  such  materials  and 
remove  them  to  a  satisfactory  distance  from  the  work.     If  the  Contractor  shall 
fail  to  replace  any  defective  work  or  materials  after  reasonable  notice,  the  City 
may  cause  such  defective  work  or  materials  to  be  replaced,  and  the  expense  thereof 
shall  be  deducted  from  the  amount  to  be  paid  the  Contractor. 

E.  It  is  further  expressly  agreed  that  the  granting  of  any  progress  certificate, 
or  the  payment  of  any  moneys  hereunder,  shall  not  be  considered  an  acceptance 
of  all  or  of  any  part  of  the  work  and  shall  in  no  way  lessen  the  liability  of  the  Con- 
tractor to  replace  defective  work  though  the  same  may  not  have  been  detected  at 
the  time  such  certificate  was  given  or  acted  upon.    All  progress  certificates  being 
made  merely  upon  approximate  estimates,  shall  be  subject  to  the  correction  of  the 
final  certificate. 

So  far  as  renewal  at  a  later  date  involves  no  greater  expense  than  at 
the  time  of  inspection  there  is  no  injustice  to  the  Contractor  involved  in 
requiring  the  replacing  of  defective  work,  or  work  below  Contract  re- 
quirements. If,  however,  the  quality,  or  compliance  with  the  Speci- 


UNIFORM   CONTRACT  FORM  16-33 

fications  is  in  some  doubt,  and  the  inspector  or  Engineer  accepts  or  ap- 
proves, and  additional  work  is  then  performed,  based  upon  the  accepted 
work,  it  becomes  a  hardship  and  an  injustice  to  the  Contractor  if  the  ad- 
ditional work  must  be  taken  out  and  renewed,  unless,  in  some  way,  bad 
faith  is  involved. 

The  remedy  or  way  out  is  not  altogether  clear.  In  the  rare  cases 
where  there  has  been  collusion  between  the  Contractor  and  inspector  or 
perhaps  where  either  an  over-zealous  Contractor  or  his  foreman  has  de- 
liberately taken  advantage  of  the  inexperience  or  inefficiency  of  an  in- 
spector, no  mercy  should  be  shown.  Where,  however,  the  work  has  been 
allowed  to  stand  without  substantial  fault,  and  without  moral  obli- 
quity on  the  Contractor's  part,  he  should  in  some  way  be  protected,  and 
many  Engineers  will  find  some  way  to  protect  him.  The  clause  above, 
allowing  "  an  equitable  reduction,"  is  one  method  available  and  is  open 
and  above  board.  Beyond  this,  however,  the  Contractor  must  appreciate 
the  possible  disadvantage  to  him  in  this  clause,  and  must  make  his  bid 
large  enough  to  cover  the  risk  in  this  particular.  The  Engineer  should 
clearly  realize  that  the  Contractor  may  make  his  bid  large  on  thrs  account, 
and  determine  the  advisability  of  including  such  a  clause. 

The  state  of  the  law  applied  to  this  may  be  gathered  from  the  fact 
that  in  New  York  the  courts  sustained  a  Contract  provision  that  the 
Contractor  should  be  bound  by  the  decision  of  the  Chief  Engineer  while 
the  City  should  not  be  bound.  The  court  seemed  to  think  that  a  large 
municipality  could  not  count  on  the  same  zeal  from  its  employees  that 
the  Contractor  could  and  that  this  extraordinary  protective  provision 
ought  to  be  sustained. 

The  provision  so  sustained  was  much  the  same  as  that  shown  below : 

F.  The  City  shall  not,  nor  shall  any  Department  or  officer  thereof,  be  pre- 
cluded or  estopped  by  any  return  or  certificate  made  or  given  by  the  Commission, 
any  Engineer,  or  other  officer,  agent  or  appointee  thereof  under  any  provision  of 
this  contract,  from  at  any  time  either  before  or  after  the  final  completion  and 
acceptance  of  the  work  and  payment  therefor  pursuant  to  any  such  return  or  cer- 
tificate, showing  the  true  and  correct  classification,  amount,  quality  and  charac- 
ter of  the  work  done  and  materials  furnished  by  the  Contractor  or  any  other 
person  under  this  contract,  or  from  showing  at  any  time  that  any  such  return  or 
certificate  is  untrue  and  incorrect  or  improperly  made  in  any  particular,  or  that  the 
work  and  materials,  or  any  part  thereof,  do  not  in  fact  conform  to  the  specifica- 
tions ;  and  the  City  shall  not  be  precluded  or  estopped,  notwithstanding  any  such 
return  or  certificate  and  payment  in  accordance  therewith,  from  demanding  and 
recovering  from  the  Contractor  such  damages  as  it  may  sustain  by  reason  of  his 
failure  to  comply  with  this  contract  or  the  specifications. 

Touching  other  provisions  in  these  sections,  among  the  forms  used  to 
cover  them  is  the  following : 


16-34  UNIFORM  CONTRACT  FORM 

G.  The  Commission  and  every  member  of  it,  the  Engineer,  and  the  employees 
of  the  Commission  and  Engineer,  shall  at  all  times  have  the  right  to  enter  the 
premises  upon  which  work  is  being  done  under  this  contract,  to  inspect  the  said 
work  and  materials,  and  to  ascertain  whether  or  not  the  construction  is  carried 
on  in  accordance  with  this  contract,  and  the  Contractor  shall  furnish  all  reason- 
able facilities  therefore,  and,  when  the  conditions  reasonably  require  notification 
of  the  Engineer,  shall  give  him  due  notice  and  ample  time  for  inspection. 

The  following  is  a  similar  provision : 

H.  The  Board  and  its  engineers,  inspectors,  agents  and  other  employees, 
shall  for  any  purpose,  and  other  parties  who  may  enter  into  contracts  with  the  Board 
for  doing  work  within  the  territory  covered  by  this  contract,  shall,  for  all  purposes 
which  may  be  required  by  their  Contracts,  have  access  to  the  work  and  the  prem- 
ises used  by  the  Contractor,  and  the  Contractor  shall  provide  safe  and  proper 
facilities  therefor.  Furthermore,  the  Board  and  its  engineers,  inspectors,  and 
agents  shall,  at  all  times,  have  immediate  access  to  all  places  of  manufacture  where 
materials  are  being  made  for  use  under  this  contract,  and  shall  have  full  facilities 
for  determining  that  all  such  materials  are  being  made  strictly  in  accordance  with 
the  specifications  and  drawings. 

This  certainly  seems  to  include  more  than  a  Contractor  ought  to  be 
called  upon  to  agree  to.  The  bookkeeper,  and  even  the  janitor,  would 
seem  to  be  able  to  assume  rights  (unauthorized  perhaps)  which  the  Con- 
tractor could  not  dispute. 

Another  Contract  form  reads : 

7.  The  Contractor  shall  permit  the  Engineer  and  his  assistants  and  persons 
designated  by  him  or  them,  and  other  representatives  of  the  Board,  to  enter  upon 
the  work  at  all  times  and  places,  and  to  give  lines  and  grades,  and  to  measure  and 
inspect  the  work  or  materials,  and  shall  provide  safe  and  proper  facilities  therefor 
and  such  samples  as  may  be  required. 

This  is  less  subject  to  criticism  than  the  previous  reading,  but  has  no 
apparent  advantage  over  the  more  concise  reading  of  Section  12,  above. 

/.  The  Contractor  shall  at  all  times  give  to  the  Commission  and  its  members, 
to  the  Engineer  and  his  assistants  and  subordinates,  and  any  person  designated 
by  the  Commission  or  its  Chairman,  all  facilities,  whether  necessary  or  conven- 
ient, for  inspecting  the  materials  to  be  furnished  and  the  work  to  be  done  under 
this  contract.  The  members  of  the  Commission,  the  Engineer  and  all  employees 
of  the  Commission  bearing  his  authorization  or  the  authorization  of  the  Commission 
or  its  Chairman,  shall  be  admitted  at  any  time  summarily  and  without  delay  to 
any  part  of  the  work  or  to  inspection  of  materials  at  any  place  or  stage  of  their 
manufacture,  preparation,  shipment  or  delivery. 

K.  The  Contractor  shall  furnish  the  Engineer  with  every  facility  for  ascer- 
taining whether  the  work  is  in  accordance  with  the  requirements  and  intentions 
of  this  contract,  even  to  the  extent  of  uncovering  or  taking  down  portions  of  fin- 
ished work.  Should  the  work  thus  exposed  or  examined  prove  satisfactory,  the  un- 


UNIFORM   CONTRACT  FORM  16-35 

covering  or  taking  down  and  the  replacing  of  the  covering  or  the  making  good  of 
the  parts  removed  will  be  paid  for  at  the  contract  prices  for  the  class  of  work  done ; 
but  should  the  work  exposed  or  examined  prove  unsatisfactory,  such  uncovering, 
taking  down,  replacing  and  making  good  shall  be  at  the  expense  of  the  Contractor. 

L.  All  materials  of  whatsoever  kind  to  be  used  in  the  work  shall  be  subject 
to  the  inspection  and  approval  of  the  Engineer  and  shall  be  subject  to  constant 
inspection  before  acceptance.  Any  unfaithful  or  imperfect  work  that  may  be 
discovered  before  its  final  acceptance  shall  be  corrected  immediately  and  any 
unsatisfactory  materials  used  in  the  work  will  be  rejected  and  shall  be  removed 
on  the  requirement  of  the  Engineer.  The  inspection  of  any  work  shall  not  relieve 
the  Contractor  of  any  of  his  obligations  to  perform  proper  and  satisfactory  work, 
as  herein  specified,  and  all  work  which,  during  the  progress  and  before  its  final 
acceptance,  may  become  damaged  from  any  cause,  shall  be  removed  and  re- 
placed by  good  and  satisfactory  work,  without  extra  charge  therefor.  The  Engi- 
neer and  his  assistants  shall  have  at  all  times  free  access  to  all  points  where  mate- 
rial to  be  used  in  the  work  is  manufactured,  procured  or  stored,  and  shall  be 
allowed  to  examine  any  material  furnished  for  use  in  the  work  under  this  contract. 

M.  The  Contractor  is  required  to  afford  the  Commissioner,  or  his  authorized 
representative,  including  engineers,  inspectors  or  any  other  help  that  said  Com- 
missioner may  designate,  all  proper  assistance  and  facilities  for  the  proper  inspec- 
tion of  the  methods  employed  in  constructing  the  work,  and  of  the  character  of  the 
material  delivered  or  used  in  the  work. 

The  Contractor  shall  furnish  all  necessary  facilities  to  enable  the  Commis- 
sioner or  his  authorized  representative  to  make  an  examination  of  any  work  al- 
ready completed.  If  the  work  is  found  defective  in  any  respect  the  Contractor 
shall  defray  the  expense  of  such  examination  and  of  satisfactory  reconstruction. 
If  the  work  is  found  satisfactory  and  according  to  specifications  such  expense  will 
be  allowed  by  the  City. 

N.  Whenever  the  Contractor  shall  be  permitted  or  directed  to  perform  work 
at  night  or  on  Sundays  or  holidays,  or  to  vary  the  period  of  hours  during  which 
work  is  carried  on  each  day,  he  shall  give  written  notice  to  the  Engineer,  so  that 
proper  inspection  may  be  provided.  Such  work  shall  be  done  under  the  regula- 
tions to  be  furnished  in  writing  by  the  Engineer  and  no  extra  compensation  shall 
be  allowed  therefor. 

The  following  is  in  point  also,  although  it  refers  in  part  to  shop  in- 
spection : 

0.  No  material  of  any  kind  may  be  used  or  any  work  done  until  it  has  been 
inspected  and  accepted  by  the  City.  The  Contractor  must  furnish  all  labor  neces- 
sary in  handling  such  material  for  inspection.  All  materials  rejected  must  be 
promptly  removed  from  the  vicinity  of  the  work.  Materials  or  workmanship 
found  at  any  time  to  be  defective  shall  be  promptly  replaced  or  remedied  by  the 
Contractor,  regardless  of  previous  inspection. 

The  Engineer,  his  assistants  and  agents,  together  with  other  parties  who  may 
enter  into  contracts  with  the  City  for  doing  work  within  the  territory  covered  by 
this  contract,  shall,  for  all  purposes  which  may  be  required  by  their  contracts,  have 


16-36  UNIFORM  CONTRACT  FORM 

access  to  the  work  and  premises  used  by  the  Contractor,  and  the  Contractor  shall 
provide  safe  and  proper  facilities  therefor.  Furthermore,  the  Engineer,  his 
assistants  and  agents  shall  at  all  times  have  immediate  access  to  all  places  of 
manufacture  where  materials  are  being  made  for  use  under  this  contract,  and  shall 
have  full  facilities  for  inspecting  the  same. 

The  field  inspection  of  the  work,  testing  of  materials,  giving  of  lines  and  grades, 
preparation  of  general  and  detail  drawings,  together  with  the  preparation  of  partial 
and  final  estimates,  will  be  done  by  the  Engineer.  The  inspection  and  super- 
vision by  the  Engineer  is  intended  to  aid  the  Contractor  in  supplying  all  material 
and  in  doing  all  work  in  accordance  with  drawings  and  specifications,  but  such  in- 
spection shall  not  operate  to  release  him  from  any  of  his  contract  obligations. 

P.  The  Contractor  shall  notify  the  Engineer,  at  a  reasonable  time  in  advance, 
of  the  starting  of  any  new  class  of  work.  In  case  any  work  is  to  be  done  at  night, 
the  contractor  shall  give  due  notice  to  the  Engineer,  at  least  two  days  before  such 
work  is  started.  Only  such  classes  of  work  shall  be  done  at  night  as  can  be  prop- 
erly inspected,  and  adequate  light  and  facilities  for  inspection  shall  be  supplied. 

Another  reading  is : 

Q.  Any  unfaithful  or  imperfect  work  or  materials  that  may  be  discovered 
before  the  final  acceptance  of  the  work  shall  be  corrected  or  replaced  immediately, 
on  the  requirement  of  the  Engineer,  notwithstanding  it  may  have  been  overlooked 
by  the  proper  inspector  and  estimated.  The  Engineer  may  drill  into  or  cut  open 
the  masonry  lining  of  the  tunnel  and  for  this  purpose  the  Contractor  shall  furnish 
all  necessary  tools  and  labor.  If  the  work  so  examined  is  found  defective  in  any 
respect,  it  shall  at  once  be  remedied  by  taking  down  and  rebuilding  the  defective 
work,  or  in  such  manner  as  the  Engineer  may  direct,  and  the  Contractor  shall 
receive  no  compensation  therefor;  but  if  defects  are  not  found  there,  examina- 
tion and  reconstruction  shall  be  paid  for  as  extra  work,  as  provided  in  this  con- 
tract. 

R.  Any  omission  to  disapprove  the  work  at  the  time  of  inspection  or  at  the 
time  of  any  monthly  or  other  estimate  shall  not  relieve  the  Contractor  of  any  of 
his  obligations;  and  all  work  of  whatever  kind,  which,  during  its  progress  and 
before  it  is  finally  accepted,  may  become  damaged  from  any  cause,  shall  be  re- 
moved and  replaced  by  good  and  satisfactory  work. 

These  clauses  for  the  removal  of  rejected  material  are  in  use: 

S.  Materials  of  whatever  kind  condemned  by  the  Engineer  or  inspector  shall 
be  removed  from  the  work  herewith,  and  shall  not  be  made  use  of  elsewhere  in 
the  work. 

T.  Any  material  found  defective  and  failing  to  satisfy  the  requirements  of 
these  specifications  shall  be  rejected,  and  the  contractor  shall  be  so  notified  by 
the  inspector ;  the  material  so  rejected  shall  not  be  used  on  the  work,  and,  upon 
written  notice  from  the  Commissioner,  the  Contractor  shall  at  once  remove  said 
material  from  the  work  and  from  the  premises  of  the  City. 

U.  Any  material  and  work  which  does  not  satisfy  the  requirements  of  these 


UNIFORM  CONTRACT  FORM  16-37 

specifications  may  be  rejected  by  the  Commissioner  at  any  time  before  the  final 
acceptance  of  the  work,  and  the  Contractor  shall  make  good  all  deficiencies  at  his 
own  expense. 

V.  If  any  material  brought  upon  the  ground  for  use  in  the  work,  or  selected 
for  the  same,  shall  be  condemned  by  the  Engineer  as  unsuitable  or  not  in  con- 
formity with  the  specifications,  the  Contractor  shah1  forthwith  remove  such  ma- 
terials as  may  be  directed  by  the  Engineer. 

The  following  form,  already  in  use,  is  suggested  as  well  meeting  the 
requirements : 

W.  Any  materials  condemned  or  rejected  by  the  Engineer  or  his  representa- 
tives may  be  branded  or  otherwise  marked,  and  shall,  on  demand,  be  at  once  re- 
moved to  a  satisfactory  distance  from  the  work. 

14.  INSURANCE.  The  Contractor  shall  secure,  in  the  name  of  the  Com- 
pany, policies  of  fire  insurance  in  amount,  form  and  companies,  satisfac- 
tory to  the  Chief  Engineer,  upon  such  structures  and  material  as  shall  be 
specified  by  the  latter,  payable  to  the  Company  for  the  benefit  of  the  Contractor 
or  the  Company  as  the  Chief  Engineer  shall  find  their  interests  to  appear. 

Most  Contracts  provide,  as  in  Section  19  folio  wing,  that  the  Contractor 
shall  turn  over  to  the  Company  or  Owner  a  completed  structure.  Any 
misfortune  which  injures  or  destroys  the  partially  completed  structure  is 
a  misfortune  to  the  Contractor,  whether  it  be  due  to  fire,  water,  or  other 
untoward  circumstance,  or  even  to  the  "  act  of  God."  The  risk  is  the  Con- 
tractor's and  apparently  the  insurance  money  should  go  to  him ;  certainly 
if  no  monthly  payment  has  been  made  to  the  Contractor,  and  apparently 
in  other  cases,  especially  if  he  be  honest  and  solvent.  If,  however,  the 
Company  or  Owner  has  paid  in  monthly  estimates  a  total  amount  in  ex- 
cess of  the  Bond,  some  protection  is  then  needed  for  the  Owner  and  the 
insurance  money  if  received  by  the  Company  should  be  applied  to  reduce 
or  cancel  the  amount  paid  by  the  Company  in  monthly  or  other  advance 
or  partial  payments  to  the  Contractor. 

The  Standard  Contract  Form  of  the  American  Institute  of  Architects 
provides  that  the  Owner  shall  furnish  the  insurance.  The  full  text  may  be 
found  in  the  chapter  on  Additional  Contract  Forms. 

It  seems  best,  on  the  whole,  that  for  most  engineering  work  the  respon- 
sibility should  rest  on  the  Contractor  to  determine  how  much  insurance 
he  desires  to  carry.  If  the  Owner  secures  the  insurance  it  is  not  quite  cer- 
tain that  the  Contractor  will  be  satisfied.  Up  to  a  certain  point  the 
Company  does  not  care  whether  he  insures  or  not,  or  how  much  he  carries. 
When  that  point  has  been  passed,  the  Contractor  must  insure  to  an  amount 
satisfactory  to  the  Chief  Engineer.  In  Contracts  for  buildings  only, 
unless  they  are  fireproof,  the  payments  made  will  become  large  enough 


16-38  UNIFORM  CONTRACT  FORM 

so  that  the  Contractor's  Bond  and  the  reserve  percentage  on  monthly 
estimates  will  not  be  sufficient  to  protect  the  Company,  so  that  insurance 
must  be  taken  out.  In  any  case,  the  Company  finally  pays  the  cost 
of  insurance  in  an  increased  price  charged  by  the  Contractor.  Some  ad- 
vantage in  having  the  Owner  take  out  the  insurance  results  from  the 
fact  that  insurance  is  more  economical  when  long  terms  are  provided  for, 
and  the  Owner  will  ultimately  hold  the  policies. 

As  to  the  interests  of  the  parties,  the  Company  or  Owner  would  have 
an  interest  to  the  extent  of  money  already  paid  on  the  structure  de- 
stroyed. Any  balance  beyond  that  would  in  general  constitute  an  interest 
of  the  Contractor.  The  adjustment  would  seldom,  if  ever,  present  any 
difficulty. 

In  many  Contracts  for  railroad  or  for  public  work,  no  buildings  are 
to  be  erected  so  that  no  clause  of  this  sort  is  needed. 

16.  INDEMNITY.  The  Contractor  shall  indemnify  and  save  harmless 
the  Company  from  and  against  all  losses  and  all  claims,  demands,  payments, 
suits,  actions,  recoveries  and  judgments  of  every  nature  and  description 
brought  or  recovered  against  it,  by  reason  of  any  act  or  omission  of  the  said 
Contractor,  his  agents  or  employes,  in  the  execution  of  the  work  or  in  conse- 
quence of  any  negligence  or  carelessness  in  guarding  the  same. 

This  section  seems  fairly  concise  and  yet  is  very  comprehensive;  it 
covers  suits  in  contract  for  mechanics'  liens,  whether  for  labor  or  material ; 
it  covers  suits  in  tort  for  negligence,  trespass,  nuisance,  or  infringement  of 
patents;  it  covers  a  failure  to  observe  any  statute  requirements  or  or- 
dinances or  other  rules ;  it  covers  claims  where  suits  have  not  been  institu- 
ted. It  is  probably  better  for  not  being  more  explicit  as  to  patent  rights, 
for  instance,  or  as  to  specific  classes  of  negligence,  or  as  to  specific  breaches 
of  laws,  ordinances,  or  regulations.  It  does  not  hold  the  Contractor  re- 
sponsible for  injuries  due  to  the  acts  of  the  Company  or  of  others. 

One  Contract  form  reads : 

A.  The  said  Contractor  agrees  that  he  will  indemnify  and  save  harmless  the 
Commonwealth  (or  the  Company)  from  all  suits  or  actions  of  every  name  and 
description,  brought  for,  or  on  account  of,  any  injuries  or  damages  received  or  sus- 
tained by  any  person  or  persons,  by  or  from  said  Contractor,  his  servants  or  agents, 
in  the  construction  of  said  work  or  by  or  in  consequence  of  any  negligence  in  guard- 
ing the  same,  or  in  improper  materials  used  in  its  construction,  or  by  or  on  account 
of  any  act  or  omission  of  the  said  Contractor  or  his  agents. 

Another  provision  in  the  same  Contract  is : 

B.  Said  Contractor  further  agrees  that  he  will  pay  all  bills  for  labor  and 
materials  contracted  for  by  him  on  account  of  the  work  herein  contemplated. 


UNIFORM  CONTRACT  FORM  16-39 

Other  forms  provide : 

C.  The  Contractor  stipulates,  covenants  and  agrees,  etc.,  that  he  has  the 
right,  power,  authority,  and  license  to  furnish  all  said  materials  and  do  all  the 
work,  etc.  and  will  defend  any  and  all  actions  .  .  .  for  infringement  of  patent 
rights,  etc. 

D.  The  Contractor  shall,  during  the  performance  of  the  work,  take  all  neces- 
sary precautions  and  place  proper  guards  for  the  prevention  of  accidents ;  shall  put 
up  and  keep  at  night  suitable  and  sufficient  lights,  and  shall  indemnify  and  save 
harmless,  etc. 

E.  The  Contractor  shall  indemnify,  protect  and  save  harmless  the  City  and 
the  Commission,  its  and  their  officers  and  agents,  from  all  suits  or  claims,  of  every 
name  or  description,  brought  against  the  City  or  the  Commission,  or  its  or  their 
officers  and  agents,  for  or  on  account  of  any  injuries  or  damages  to  person  or  prop- 
erty received  or  sustained  by  any  person  or  persons,  by  or  from  the  Contractor, 
his  servants  or  agents,  hi  or  on  account  of  work  done  under  this  contract  or  exten- 
sions of  or  additions  thereto,  whether  caused  by  negligence  or  not,  or  by  or  in  con- 
sequence of  any  negligence  in  guarding  the  same,  or  any  materials  or  explosives  for 
the  same,  or  by  or  on  account  of  any  improper  materials  used  in  its  construction,  or 
by  or  on  account  of  any  accident,  or  of  any  act  or  omission  of  the  Contractor,  his 
servants  or  agents ;  and  the  Contractor  further  agrees  that  so  much  of  the  money 
due  to  him  under  this  agreement  as  shall  be  considered  necessary  by  the  Commis- 
sion may  be  retained  until  all  such  suits  or  claims  for  damages  as  aforesaid  have  been 
settled,  and  evidence  to  that  effect  has  been  furnished  to  the  satisfaction  of  the 
Commission. 

F.  The  liability  of  the  Contractor  under  this  Article  is  absolute  and  is  not 
dependent  upon  any  question  of  negligence  on  his  part  or  on  the  part  of  his  agents, 
servants  or  employees,  and  the  negligence  of  the  Engineer  to  direct  the  Contractor 
to  take  any  particular  precautions  or  to  refrain  from  doing  any  particular  thing 
shall  not  excuse  the  Contractor. 

This  seems  unfair  to  the  Contractor.  Its  purpose  apparently  is  to  re- 
lieve the  City  from  proving  the  negligence  of  the  Contractor,  for  which 
evidence  might  be  unavailable.  That  part  which  states  that  "  negli- 
gence of  the  Engineer  to  direct  .  .  .  any  particular  precautions  shall  not 
excuse  the  Contractor  "  is  proper. 

A  provision  to  the  following  effect  is  sometimes  introduced : 

G.  Since  the  Contractor  agrees  to  indemnify  the  City  against  all  liability  or 
damages  on  account  of  accidents  occasioned,  or  claimed  to  be  occasioned,  by  the 
omission  or  negligence  of  himself,  his  agents,  or  his  workmen  during  the  continuance 
of  this  agreement,  and  against  all  claim  for  royalties  on  patents  as  provided  for  hi 
Article  .  .  therefore  the  Contractor  shall  be  promptly  and  duly  notified  in  writing 
by  the  City  of  the  bringing  of  any  suit  or  suits  on  such  accounts  against  the  City, 
and  shall  be  given  the  option  of  assuming  the  sole  defense  thereof.    The  Contractor 
shall  pay  all  judgments  obtained  by  reason  of  accidents  or  patents  in  any  suit  or 
suits  against  the  City,  including  all  legal  costs,  court  expenses,  and  other  like  ex- 
penses. 


16-40  UNIFORM  CONTRACT  FORM 

This  seems  an  undesirable  provision,  at  least  in  the  form  stated  here. 
There  may  be  involved  in  a  suit  some  general  principle  which  does  not  much 
interest  the  Contractor;  in  some  cases  the  Contractor's  interest  in  the 
long  run  may  even  be  contrary  to  that  of  the  City,  and  the  City  should 
not  divest  itself  of  power  to  protect  its  interests. 

A  provision  that : 

H.  The  Contractor,  at  the  option  of  the  City,  may  be  allowed  to  assume  the 
sole  defense, 

would  not  be  subject  to  the  same  objection,  but  such  a  clause  seems  un- 
necessary. 

Under  Section  17  is  a  provision  for  retaining  moneys  in  case  of  "  any 
lien  or  claim  for  which  the  Company  might  become  liable,"  and  this 
properly  supplements  this  Section  15. 

Section  15  above,  seems  sufficient  for  all  of  the  purposes  recited  in  the 
other  readings.  It  should  be  noted  that  the  Company  is  protected  against 
any  "  loss  "  to  itself  as  well  as  against  claims  from  others. 

16.  SETTLEMENT    FOR    WAGES.     Whenever,  in  the  opinion  of  the 
Chief  Engineer,  it  may  be  necessary  for  the  progress  of  the  work  to  secure 
to  any  of  the  employes  engaged  on  the  work  under  this  contract  any  wages 
which  may  then  be  due  them,  the  Company  is  hereby  authorized  to  pay  said 
employes  the  amount  due  them  or  any  lesser  amount,  and  the  amount  so  paid 
them,  as  shown  by  their  receipts,  shall  be  deducted  from  any  moneys  that  may 
be  or  become  payable  to  said  Contractor. 

17.  LIENS.     If  at  any  time  there  shall  be  evidence  of  any  lien  or  claim 
for  which  the  Company  might  become  liable  and  which  is  chargeable  to  the 
Contractor,  the  Company  shall  have  the  right  to  retain  out  of  any  payment 
then  due  or  thereafter  to  become  due,  an  amount  sufficient  to  completely  indem- 
nify the  Company  against  such  lien  or  claim,  and  if  such  lien  or  claim  be  valid, 
the  Company  may  pay  and  discharge  the  same,  and  deduct  the  amount  so  paid 
from  any  moneys  which  may  be  or  become  due  and  payable  to  the  Contractor. 

While  under  Section  15,  the  Contractor  is  fully  liable  for  the  matters 
recited  in  Sections  16  and  17,  the  latter  sections  provide  a  more  effective 
remedy  in  many  cases ;  a  failure  to  pay  for  labor  may  cause  laborers  to 
desert  the  work  or  to  strike  and  so  lead  to  considerable  delay  which  may 
be  avoided  by  means  of  the  provisions  above.  In  some  cases  the  Contrac- 
tor may  even  benefit  from  a  payment  to  laborers  before  his  next  month's 
estimate  becomes  due. 

Section  17,  in  specifying  "  claims  "  as  well  as  "  liens,"  apparently 
supplements  Section  15  by  allowing  the  Company  to  retain  moneys  other- 
wise due  the  Contractor,  and  thus  protect  itself  in  some  degree  in  case 
there  should  be  claims  large  enough  to  render  the  protection  of  the  Bond 


UNIFORM  CONTRACT  FORM  16—41 

insufficient.  In  practice,  money  should  not  be  retained  against  a  "  claim," 
provided  the  Bond  gives  adequate  protection.  The  same  is  true  when 
the  claim  is  found  valid.  The  Contractor  may  be  hampered  in  his  work 
if  money  is  retained. 

In  another  Contract  form  of  similar  import,  there  is  an  added  provi- 
sion: 

A.  The  City  shall  have  the  right  to  retain  from  the  contract  price  such  sum 
as  shall  enable  it  to  pay  the  amount  of  any  claim  for  damages  resulting  from  such 
accident,  .  .  .  until  the  validity  of  any  claim  shall  be  established  and  finally  de- 
termined, and  if  established  and  finally  determined,  the  same  shall  be  paid  from  the 
amount  so  retained ;  otherwise  such  amount  shall  be  paid  to  the  Contractor. 

Other  forms  provide : 

B.  The  Commission  for  the  City  may  retain  out  of  any  amounts  due  to  the 
Contractor,  sums  sufficient  to  cover  any  unpaid  claims  of  mechanics,  laborers  or 
others,  for  work  performed  or  materials  furnished  under  this  contract ;   provided, 
that  notice,  in  writing,  of  such  claims,  signed  by  the  claimants,  has  been  filed  pre- 
viously in  the  office  of  the  Commission. 

C.  The  Commissioner  may,  whenever  he  shall  have  reason  to  believe  that  the 
Contractor  has  neglected  or  failed  to  pay  any  sub-contractors,  material  men, 
workmen  or  employees  for  work  performed  on  or  materials  furnished  and  used  in  or 
about  the  work  contracted  for,  order  and  direct  that  no  future  vouchers  or  esti- 
mates be  issued  and  no  further  payments  be  made  upon  such  contract  until  said 
Commissioner  shall  be  satisfied  that  such  sub-contractors,  material  men,  workmen 
and  employees  have  been  fully  paid,  and  the  reserve  sum  of  15  per  cent  hereinafter 
mentioned  shall  not  be  payable  until  the  Contractor  shall  have  satisfied  the  Com- 
missioner that  all  sub-contractors,  material  men,  workmen  and  employees  have 
been  fully  paid. 

This  is  on  a  different  basis.  If  workmen  and  employees  are  unpaid, 
the  successful  continuance  of  the  work  is  threatened,  and  the  retaining 
of  moneys  in  the  interests  of  workmen  may  give  them  courage  to  remain 
on  the  job. 

The  following  provision  is  more  verbose : 

D.  If  at  any  time  during  the  progress  of  said  work,  said  Contractor  shall  fail 
or  neglect  to  pay  for  any  labor  performed,  transportation  charges,  material  fur- 
nished, or  tools,  machinery,  appliances,  fuel,  provisions  or  supplies  of  any  sort  or 
kind  used  or  consumed  in,  upon  or  on  account  of  said  work,  for  ten  (10)  days  after 
payment  for  same  shall  have  become  due,  then  the  said  Sanitary  District  shall  have 
the  power  to  pay  for  such  labor,  or  for  such  transportation  charges,  materials,  tools, 
machinery,  appliances,  fuel,  provisions  or  supplies,  and  the  amount  so  paid  shall 
be  retained  out  of  the  money  due  or  to  become  due  said  Contractor.     The  said 
Sanitary  District  may  refuse  to  make  the  payments  hereinafter  mentioned  to  the 
extent  of  such  indebtedness  until  satisfactory  evidence  in  writing  has  been  fur- 
nished that  said  indebtedness  has  been  discharged.     In  any  such  case  said  Sanitary 


16-42  UNIFORM   CONTRACT  FORM 

District  is  hereby  authorized  and  empowered  by  said  Contractor  to  ascertain  by  the 
Engineer  the  amount  due  or  owing  from  said  Contractor  to  any  laborer  or  laborers, 
or  to  any  person  or  persons  or  corporation  for  labor,  transportation  charges,  material, 
tools,  machinery,  appliances,  fuel,  provisions  or  supplies  of  any  sort  or  kind  used  or 
consumed  upon,  in  or  on  account  of  the  work  covered  by  this  contract,  in  such 
manner  and  upon  such  proofs  as  the  said  Engineer  may  deem  sufficient. 

Another  clause,  sometimes  used,  is  this : 

E.  The  Contractor  shall,  at  such  times  as  moneys  are  payable  hereunder, 
deliver  to  the  Engineer  a  sworn  statement,  showing  as  of  that  date  the  amount 
owing  by  him  for  material  furnished  and  labor  performed. 

The  provisions  of  Sections  16  and  17  above  seem  effective  and  satis- 
factory. 

18.  WORK  ADJACENT  TO  RAILROAD.  Wherever  the  work  em- 
braced in  this  contract  is  near  the  tracks,  structures  or  buildings  of  this  Com- 
pany or  of  other  railroads,  the  Contractor  shall  use  proper  care  and  vigilance 
to  avoid  injury  to  persons  or  property.  The  work  must  be  so  conducted  as  not 
to  interfere  with  the  movement  of  trains  or  other  operations  of  the  railroad; 
or,  if  in  any  case  such  interference  be  necessary,  the  Contractor  shall  not  pro- 
ceed until  he  has  first  obtained  specific  authority  and  directions  therefor  from 
the  proper  designated  officer  of  the  Company  and  has  the  approval  of  the  Engi- 
neer. 

This  section  has  special  application  to  railroad  work,  and  seems  well 
adapted  to  its  purpose. 

It  is  not  inappropriate  that  a  clause  of  similar  purport  should  sometimes 
be  used  with  relation  to  work  along  highways  when  either  general  traffic 
or  street  railway  traffic  might  need  specific  protection.  Any  suggestion 
as  to  its  form  for  such  cases  would  seem  unwise  here.  The  form  should 
be  adapted  to  the  conditions  existing. 

In  many  cases  a  street  railway  company  pays  nothing  for  the  use  of 
the  streets  it  occupies,  and  a  question  may  arise  whether  it  is  lawful  for  a 
municipality  to  spend  public  money  (through  the  Contractor)  to  avoid 
injury  to  the  railway  property.  Whatever  may  be  the  law  as  to  this, 
it  is  certainly  lawful  to  spend  money  to  protect  traffic,  in  which  the  general 
public  has  a  direct  interest,  and  this  section  refers  to  traffic  as  well  as  to 
property.  The  requirement  to  avoid  injury  to  property  may  involve 
not  expense,  but  only  wise  and  careful  business  procedure.  Whether  the 
street  railway  company  would  have  a  remedy  if  the  municipality  was 
responsible  for  injury  to  railway  property,  in  the  case  stated,  if  this  were 
necessary  in  the  public  interest,  may  be  doubted ;  for  unnecessary  injury, 
the  railway  might  readily  have  its  remedy. 


UNIFORM  CONTRACT  FORM  16-43 

19.  RISK.  The  work  under  this  contract  in  every  respect  shall  be  at  the 
risk  of  the  Contractor  until  finished  and  accepted,  except  damage  or  injury 
caused  directly  by  Company's  agents  or  employes. 

It  is  of  the  greatest  importance  that  this  matter  should  be  covered 
clearly  in  every  contract.  The  provision  here  seems  wise.  In  special 
cases  it  may  seem  too  severe;  in  such  cases  there  should  be  substituted 
a  provision  stating  with  great  clearness  the  risk  assumed  by  each,  leaving 
no  reasonable  chance  for  misunderstanding  or  lawsuit. 

Other  forms  are : 

A.  The  Contractor  shall  be  held  responsible  for  any  or  all  materials  or  work 
done  to  the  full  amount  of  all  payments  made  thereon,  and  he  will  be  required  to 
make  good  at  his  own  cost  any  injury  or  damage  which  said  materials  or  work  may 
sustain  from  any  sources  or  causes  whatever  before  the  final  acceptance  thereof. 

B.  All  damage  to  the  work,  caused  by  shrinkage,  settlement,  washing,  or  other 
cause,  whether  accidental  or  not,  or  avoidable  or  not,  before  the  completion  and 
written  acceptance  of  the  whole  work  by  the  Chief  Engineer,  approved  by  the  Com- 
mission, shall  be  repaired  and  made  good  by  the  Contractor. 

C.  The  Contractor  shall  take  all  responsibility  of  the  work,  shall  bear  all 
losses  resulting  to  him  on  account  of  the  amount  or  character  of  the  work  or  because 
the  nature  of  the  land  in  or  upon  which  the  work  is  done  is  different  from  what  is 
assumed  or  what  is  expected,  or  on  account  of  the  weather,  floods  or  other  causes. 

D.  All  risk  of  loss  or  damage  to  the  works  or  to  any  part  thereof  or  to  any  of 
the  materials,  plant,  tools,  appliances  or  other  things,  used  in  doing  the  work  prior 
to  final  completion  is  assumed  and  shall  be  borne  by  the  Contractor,  and  any  such 
loss  or  damage  shall  be  made  good  by  the  Contractor  at  his  own  cost. 

E.  The  prices  named  in  the  bid  .  .  .  shall  be  paid  ...  as  full  compensa- 
tion .  .  .  for  all  loss  or  damage  arising  out  of  the  nature  of  the  work  as  aforesaid, 
or  from  the  action  of  the  elements,  or  from  any  unforeseen  obstruction  or  difficulties 
which  may  be  encountered  in  the  prosecution  of  the  same ;  and  for  all  risks  of  every 
description  connected  with  the  work. 

F.  The  Board  shall  not  be  liable  for  any  loss  or  damage,  etc.,  nor  for  any  risk, 
etc. 

Section  19,  above,  is  very  terse  and  seems  preferable  to  the  others; 
the  fact  that  it  states  "  except  damage  or  injury  caused  directly  by  Com- 
pany 's  agents  or  employees  "  makes  it  fair  to  the  Contractor.  The  law  is 
very  clear  that  where  the  completed  structure  is  contracted  for,  the  risk 
rests  solely  upon  the  Contractor,  so  that  the  words  "until  finished  and 
accepted  "  are  peculiarly  to  the  point,  and  "  in  every  respect  at  the  risk 
of  the  Contractor  "  is  conclusive. 


16-44  UNIFORM   CONTRACT  FORM 

20.  ORDER  AND  DISCIPLINE.  The  Contractor  shall  at  all  times 
enforce  strict  discipline  and  good  order  among  his  employes,  and  any  em- 
ploye of  the  Contractor  who  shall  appear  to  be  incompetent,  disorderly  or  in- 
temperate, or  in  any  other  way  disqualified  for  or  unfaithful  to  the  work  en- 
trusted to  him,  shall  be  discharged  immediately  on  the  request  of  the  Engineer, 
and  he  shall  not  again  be  employed  on  the  work  without  the  Engineer's  written 
consent. 

A  provision  to  this  general  effect  is  found  in  most  Contracts. 
Other  forms  are : 

A.  The  Contractor  shall  employ  only  competent  men  to  do  the  work,  and 
whenever  the  Engineer  shall  notify  the  Contractor,  in  writing,  that  any  man  on  the 
work  is,  in  his  opinion,  incompetent,  unfaithful,  disorderly,  or  otherwise  unsatisfac- 
tory, such  man  shall  be  discharged  from  the  work,  and  shall  not  again  be  employed 
on  it,  except  with  the  consent  of  the  Engineer. 

B.  Employ  only  competent  and  skilful  men  .  .  .  and  .  .  .  any  man  incom- 
petent, unfaithful  or  disorderly,  or  who  uses  threatening  or  abusive  language  to  any 
official  having  supervision  of  the  work  .  .  .  shall  be  discharged. 

C.  The  Contractor  shall,  on  the  written  request  of  the  Engineer,  discharge  any 
person  in  his  employ  who  appears  to  the  Engineer  to  be  disorderly,  incompetent, 
or  to  be  employed  in  violation  of  any  terms  of  this  contract. 

D.  If  any  person  employed  on  the  works  by  the  Contractor  be  disobedient,  or 
appears  to  the  Engineer  to  be  incompetent,  unfaithful,  or  disorderly,  he  shall  be  dis- 
charged immediately  on  the  requisition  of  the  Engineer  and  shall  not  be  again 
employed  on  the  work. 

The  word  "  disobedient  "  covers  an  important  feature.     The  word 
"  unfaithful  "  in  Section  20  probably  serves  the  purpose. 

E.  The  Contractor  shall  employ  competent  foremen  and  laborers,  and  shall 
discharge,  at  the  request  of  the  Engineer,  any  incompetent  or  unfaithful  men  in 
his  employ.     None  but  men  expert  in  their  respective  branches  of  work  shall  be 
employed  where  special  skill  is  required. 

F.  The  Contractor  shall  employ  only  competent,  skillful  and  faithful  men  to 
do  the  work.     Whenever  the  Engineer  shall  notify  the  Contractor  in  writing  that  in 
his  opinion  any  man  on  the  work  is  incompetent,  unfaithful  or  disorderly,  such 
man  shall  be  discharged  from  the  work  and  shall  not  again  be  employed  on  it. 

G.  The  Contractor  shall  employ  only  competent  men  to  do  the  work  under  this 
contract,  which  men  shall  be  subject  to  the  approval  of  the  Engineer,  whose  written 
order  to  the  Contractor  requiring  the  discharge  of  any  employee  for  inefficiency, 
insubordination,  profanity,  inebriety  or  any  other  just  cause,  shall  be  peremptory 
and  binding  upon  said  Contractor,  and  shall  debar  said  employee  from  further  em- 
ployment on  this  work. 

H.  Upon  direction  of  the  Director,  the  Contractor  shall  discharge  immediately 
and  shall  not  re-employ  on  the  work  any  superintendent,  foreman,  employee,  or 


UNIFORM   CONTRACT  FORM  16-45 

agent  of  any  kind  whose  presence  the  Director  shall  deem  in  any  way  prejudicial 
to  the  work. 

Section  20  above  places  upon  the  Contractor  the  burden  of  the  initia- 
tive in  preserving  order  and  enforcing  discipline  while  providing  for  ac- 
tion if  necessary  on  the  part  of  the  Engineer.  It  should  be  noted  that  the 
matter  is  in  the  hands  of  the  Engineer  who  is  upon  the  ground.  The 
Contractor,  if  dissatisfied,  has  opportunity  for  appeal  to  the  Chief  En- 
gineer. It  is  probable  that  the  latter  would  rarely  fail  to  support  his 
subordinate,  but  the  situation  hardly  admits  of  arbitration. 

21.  CONTRACTOR  NOT  TO  HIRE  COMPANY'S  EMPLOYES.     The 
Contractor  shall  not  employ  or  hire  any  of  the  Company's  employes  without 
the  permission  of  the  Engineer. 

This  provision  is  not  a  common  one,  but  seems  desirable.  It  guards 
the  Company  against  becoming  short-handed  at  some  inopportune  time. 
Furthermore,  especially  in  remote  regions,  the  employees  are  often  thrown 
in  very  close  contact  with  the  Contractor,  and  an  unscrupulous  Contrac- 
tor might  make  it  plain  to  some  inspector  or  subordinate  engineer  that 
he  would  be  sure  of  employment  even  if  unsatisfactory  to  the  Engineer 
from  disloyalty  or  for  other  reason. 

22.  INTOXICATING    LIQUORS   PROHIBITED.    The    Contractor,   in 
so  far  as  his  authority  extends,  shall  not  permit  the  sale,  distribution  or  use  of 
any  intoxicating  liquors  upon  or  adjacent  to  the  work,  or  allow  any  such  to  be 
brought  upon,  to  or  near  the  property  of  the  Company. 

A  provision  such  as  Section  22  is  not  uncommon,  but  is  absent  in  some 
carefully  drawn  Contracts.  Whatever  view  may  be  taken  upon  the  general 
proposition  as  to  prohibition  in  cities  or  towns,  it  is  becoming  recognized 
that  drunkenness,  often  occurring  after  pay  day,  is  a  very  serious  detri- 
ment to  the  proper  conduct  of  the  work. 

Other  readings  are : 

A.  The  Contractor  shall  neither  bring  nor  allow  others  to  bring  any  spirituous 
or  fermented  liquor,  or  other  intoxicant  upon  the  grounds  occupied  for  the  prose- 
cution of  the  work ;   neither  shall  he  furnish  nor  allow  others  to  furnish  liquors  or 
other  intoxicants  to  the  workmen  in  his  employ  or  to  any  person  or  persons  in  the 
vicinity. 

B.  He  shall  not  permit  or  suffer  the  introduction  or  use  of  alcoholic  liquors 
upon  or  about  the  work  embraced  in  this  contract. 

23.  CLEANING  UP.    The  Contractor  shall,  as  directed  by  the  Engineer, 
remove  from  the  Company's  property  and  from  all  public  and  private  property, 


16-46  UNIFORM   CONTRACT  FORM 

at  his  own  expense,  all  temporary  structures)  rubbish  and  waste  materials  re- 
sulting from  his  operations. 

This  section  explains  itself,  and  appears  worth  while  although  not  used 
in  some  well  written  Contracts. 
Alternative  readings  follow : 

A.  On  or  before  the  completion  of  the  work  the  Contractor  shall,  excepting 
as  otherwise  expressly  directed  or  permitted  in  writing,  tear  down  and  remove  all 
temporary  buildings  and  structures  built  by  him ;  and  all  rubbish  of  all  lands  from 
the  grounds  which  he  has  occupied,  and  shall  leave  the  spoil  banks  and  all  other 
parts  of  the  grounds  which  may  have  been  affected  by  his  operations,  in  a  neat  and 
satisfactory  condition. 

B.  On  or  before  the  completion  of  the  work  the  Contractor  shall,  excepting  as 
otherwise  expressly  directed  or  permitted  in  writing,  tear  down  and  remove  all  tem- 
porary buildings  and  structures  built  by  him ;  and  all  rubbish  of  all  kinds  from  the 
grounds  which  he  has  occupied,  and  shall  leave  the  spoil  banks  and  all  other  parts  of 
the  grounds  which  may  have  been  affected  by  his  operations,  in  a  neat  and  satisfac- 
tory condition. 

C.  On  or  before  the  completion  of  the  work,  the  Contractor  shall,  without 
charge  therefor,  tear  down  and  remove  all  buildings  and  other  temporary  struc- 
tures built  by  him  for  his  own  use,  and  remove  the  plant,  surplus  material  and 
rubbish  of  all  kinds,  and  shall  leave  the  work  and  surroundings  hi  neat  condition. 

D.  After  the  completion  of  the  work  the  Contractor  is  to  remove  all  temporary 
structures  built  by  him  and  all  surplus  materials  of  all  kinds  from  the  side  of  the 
work,  and  leave  the  whole  clean  and  presentable. 

E.  Upon  completion  of  the  structures,  all  surplus  material,  temporary  struc- 
tures built  by  the  Contractor  and  debris  resulting  from  construction,  reconstruc- 
tion or  removal,  etc.,  are  to  be  removed.    No  special  payment  will  be  made  for  the 
removal  of  debris,  its  cost  and  value  being  covered  by  the  prices  paid  for  the  con- 
struction in  place.     The  work  will  not  be  accepted  or  the  contract  considered  com- 
pleted until  the  work  of  cleaning  up  is  also  finished. 

While  more  verbose  this  apparently  adds  nothing  to  what  is  covered 
by  Section  23. 

F.  The  Contractor  further  agrees  to  remove  all  materials,  implements,  barri- 
cades, falsework,  debris  and  rubbish  connected  with  or  caused  by  said  work  imme- 
diately upon  completion  of  the  same,  and  to  leave  the  premises  in  perfect  condition 
hi  so  far  as  affected  by  the  work  under  this  contract. 

The  following  covers  the  keeping  clear  of  work  during  construction : 

G.  The  Contractor  shall  remove  surplus  excavated  material  and  materials  for 
construction  as  the  work  progresses,  and  shall  render  the  street  suitable,  safe  and 
convenient  for  traffic.    Before  final  acceptance  of  the  work,  the  Contractor  shall 


UNIFORM   CONTRACT  FORM  16-47 

clean  the  street  surface,  walks,  gutters,  fences,  lawns,  private  property,  rights-of- 
way  and  structures,  leaving  them  in  as  good  condition  as  originally  found,  and 
shall  remove  all  machinery,  tools,  surplus  materials,  temporary  buildings  and  other 
structures,  from  the  site  of  the  work.  Furthermore,  the  sewers,  manholes,  inlets, 
etc.,  shall  be  cleared  of  all  scaffolding,  centering,  rubbish,  or  dirt. 

H.  The  Contractor  shall  at  his  own  expense  keep  the  work,  streets,  and  all 
public  places  occupied  by  him  clear  of  all  refuse  and  rubbish  that  may  accumulate 
from  any  source  whatever  and  shall  leave  them  in  a  neat  condition ;  but  this  is  in 
no  way  to  be  construed  as  placing  upon  the  Contractor  the  usual  duties  of  the  Street 
Cleaning  Department. 

Waste  material  of  any  character  will  under  no  conditions  be  permitted  to  re- 
main on  the  streets  or  work,  but  must  immediately  on  its  becoming  unfit  for  use  hi 
the  work  be  carted  away  and  disposed  of  by  the  Contractor  at  his  own  expense. 

The  last  provision,  H,  is  taken  from  a  Contract  for  work  upon  elevated 
railway  construction. 

24.  ENGINEER   AND    CHIEF   ENGINEER   DEFINED.     Wherever  in 
this  contract  the  word  Engineer  is  used,  it  shall  be  understood  as  referring  to  the 
Chief  Engineer  of  the  Company,  acting  personally  or  through  an  assistant 
duly  authorized  in  writing  for  such  act  by  the  Chief  Engineer,  and  wherever 
the  words  Chief  Engineer  are  used  it  shall  be  understood  as  referring  to  the 
Chief  Engineer  in  person,  and  not  to  any  assistant  engineer. 

25.  POWER  OF  ENGINEER.     The  Engineer  shall  have  power  to  reject 
or  condemn  all  work  or  material  which  does  not  conform  to  this  contract ;  to 
direct  the  application  of  forces  to  any  portion  of  the  work  which,  in  his  judgment, 
requires  it ;  to  order  the  force  increased  or  diminished,  and  to  decide  questions 
which  arise  between  the  parties  relative  to  the  execution  of  the  work. 

26.  ADJUSTMENT  OF  DISPUTE.     All  questions  or  controversies  which 
may  arise  between  the  Contractor  and  the  Company,  under  or  in  reference  to 
this  contract,  shall  be  subject  to  the  decision  of  the  Chief  Engineer,  and  his  de- 
cision shall  be  final  and  conclusive  upon  both  parties. 

These  three  sections  together  constitute  very  important  provisions 
of  the  Contract.  In  many  Contracts  definitions  are  placed  near  the  be- 
ginning of  the  Contract,  and  definitions  of  Engineer  and  Chief  Engineer 
should  then  be  among  the  others.  This  order  of  early  definitions  seems 
logical.  The  term  Resident  Engineer  is  often  used  for  the  Engineer  in 
charge,  locally,  of  construction  work.  In  municipal  work  the  title,  instead 
of  Chief  Engineer,  may  be  City  Engineer,  Commissioner  of  Public  Works, 
City  Manager,  or  Director.  Under  Section  25  above,  the  powers  defined, 
which  are  large,  seem  to  be  those  which  should  be  exercised  by  the  En- 
gineer locally  in  charge  of  the  work,  and  are  such  as  to  give  him  very  com- 
plete control  normally  without  intervention  on  the  part  of  the  Chief  En- 


16-48  UNIFORM   CONTRACT  FORM 

gineer.  It  is  important  that  he  should  have  unquestioned  authority 
over  the  conduct  of  the  work,  as  above  provided. 

It  is  only  fair  to  the  Contractor,  however,  as  provided  in  Section  26, 
that  he  should  have  the  right  of  appeal  to  the  Chief  Engineer,  to  whom  the 
Engineer  is  subordinate  and  from  whom  he  receives  instructions,  although 
he  necessarily  acts  largely  upon  his  own  responsibility  as  to  details,  and  in 
emergencies.  The  prompt  and  effective  conduct  of  the  work  requires 
that  the  Engineer  should  exercise  such  powers.  The  Engineer,  however, 
is  not  infrequently  young,  active,  and  keen  with  enthusiasm,  but  with 
experience  not  sufficiently  developed  to  prevent  a  tendency  to  look  over- 
much to  the  interest  of  his  employer,  the  Company,  with  inadequate 
appreciation  of  the  rights  of  the  Contractor.  What  Engineer  may  have 
charge  of  the  work  may  not  be  known,  but  the  Contractor  before  making 
his  bid,  should  know  from  experience  or  through  inquiry,  the  character 
and  disposition  of  the  Chief  Engineer,  and  in  case  of  uncertainty  or  dis- 
agreement should  have  the  benefit  of  his  decision  as  is  above  provided. 
A  Contractor  sometimes  refuses  to  bid  where  he  believes  the  Chief  Engineer 
to  be  unreasonable  or  unjust  in  his  relations  with  the  Contractor ;  in  any 
case  the  bid  should  be  made  with  a  knowledge  of  the  fairness,  or  lack  of 
it,  on  the  part  of  the  Chief  Engineer. 

The  provision  that  the  decision  of  the  Chief  Engineer  shall  be  final 
and  conclusive  upon  both  parties  is  of  great  importance,  and  extended 
comment  is  justified.  The  position  of  the  Chief  Engineer,  in  this  matter, 
is  much  like  that  of  an  arbitrator.  Arbitrators  are  sometimes  appointed 
by  the  court,  sometimes  in  accordance  with  a  provision  in  the  Contract. 
When  appointed  by  the  court  their  action  may  legally  be  final  and  con- 
clusive, but  this  is  not  in  point  here.  Where  arbitration  and  the  selec- 
tion of  arbitrators  is  provided  for  in  advance  in  the  Contract,  which  states 
that  their  finding  shall  be  conclusive,  the  decisions  have  been  to  the  effect 
that  such  provision  is  illegal,  because  it  ousts  the  jurisdiction  of  the  courts. 

This  view  has  become  unimportant  because  another  legal  doctrine  is 
found  to  be  the  proper  one  to  apply  to  this  case ;  the  doctrine  of  the  "  con- 
dition precedent."  When  the  decision  of  the  Chief  Engineer,  or  some 
specified  official  or  person,  is  made  a  condition  precedent  to  the  payment 
of  money  or  the  acceptance  of  work,  the  courts  will  sustain  such  a  pro- 
vision. This  decision  may  cover  the  classification  of  material,  the  quan- 
tities of  any  material,  the  acceptance  of  work,  and  many  other  matters 
requiring  specific  determination.  While  the  words  "  condition  prece- 
dent "  are  often  found,  their  use  is  not  necessary  provided  it  appears  from 
the  Contract  that  this  was  intended. 

The  courts  hold  that  the  parties  to  the  Contract  have  a  right  to  agree 
how  matters  involved  should  be  determined,  and  the  courts  cannot  set 


UNIFORM   CONTRACT  FORM  16-49 

aside  such  an  agreement  without  constructing  a  new  Contract.  The 
prices  and  terms  have  been  fixed  in  view  of  such  agreement.  Moreover, 
in  this  case,  the  jurisdiction  of  the  courts  is  not  ousted.  If  the  Company 
refuses  to  pay,  the  courts  must  be  resorted  to  to  secure  judgment  and  pay- 
ment, although  the  amount  of  such  payment  has  been  fixed  by  the  Chief 
Engineer  as  a  condition  precedent  to  any  obligation  of  the  Company  to 
pay.  The  Contractor  may,  under  some  Contracts,  be  brought  into  a 
Court  of  Equity  to  secure  specific  performance  of  Contract  on  his  part. 
Either  the  Contractor  or  the  Company  may  enter  suit  in  a  Court  of  Equity 
to  make  it  appear  that  the  Chief  Engineer  is  guilty  of  fraud,  or  what  is 
much  the  same  thing,  error  so  gross  as  to  indicate  lack  of  good  faith. 

A  Circuit  Court  judge  once  instructed  a  jury  that  the  decision  of  a 
Chief  Engineer  could  be  set  aside  for  "  gross  error/'  but  the  Supreme 
Court  of  the  United  States,  to  which  the  case  was  appealed,  overruled  this 
decision,  stating  that  the  error  must  be  "  so  gross  as  to  indicate  bad  faith," 
and  this  is  clearly  the  law.  If  the  Chief  Engineer  should,  without  suffi- 
cient reason,  refuse  to  make  an  estimate  or  render  a  decision  required  by 
the  Contract,  such  refusal  to  act  would  constitute  bad  faith  and  the  courts 
would  take  some  action  to  remedy  the  trouble.  The  courts  have  also  found 
bad  faith  to  exist  in  at  least  two  cases  where  the  Chief  Engineer  was 
dominated  by  his  superior  officer,  the  president  of  the  railroad.  Utter 
carelessness  has  also  been  held  to  show  bad  faith.  In  some  cases  it  has 
been  the  Contractor  who  unsuccessfully  contested  the  decision  of  the  Chief 
Engineer,  but  in  other  cases  it  has  been  the  Company. 

In  most  Contracts,  as  in  Section  26  above,  the  decision  is  binding  on 
both  parties.  In  an  important  Contract  to  which  the  City  of  New  York 
was  a  party,  there  was  a  provision  that  the  Contractor  was  held  by  the 
decision  of  the  Chief  Engineer,  but  the  City  was  not ;  and  the  court  sus- 
tained the  Contract  in  this  matter  on  the  ground  that  the  Contractor  could 
protect  his  own  interests,  but  a  municipality  could  not  safely  count  on  the 
zeal  of  its  officials,  so  that  a  provision  for  greater  protection  to  the  City 
was  wise  and  legal. 

The  courts  have  also  held  that  the  fact  of  a  Chief  Engineer  being  an 
employee  of  the  Company  did  not  make  such  a  provision  as  Section  26 
unsuitable  or  illegal;  that  in  fact  the  Chief  Engineer  or  Architect  has 
special  qualifications,  is  familiar  with  the  work  in  hand,  and  is  certainly 
more  competent  than  a  jury  to  determine  matters  connected  with  the 
Contract. 

The  law  with  relation  to  this  clause  may  be  summarized  as  follows : 

Whenever  it  is  apparent  from  the  Contract,  taken  as  a  whole,  that 
the  decision  of  the  Chief  Engineer  is  to  be  final  and  conclusive,  it  is  not 
essential  that  the  words  "  final  "  or  "  conclusive  "  shall  be  specifically 


16-50  UNIFORM   CONTRACT  FORM 

used,  nor  is  it  necessary  that  the  words  "  condition  precedent  "  shall  occur, 
although  both  of  these  are  desirable.  When  it  is  apparent  that  the  parties 
to  the  Contract  have  agreed  to  accept  the  decision  of  the  Chief  Engineer, 
no  evidence  as  to  error  in  his  decision  shall  be  accepted,  unless  to  prove 
gross  error  such  as  to  imply  fraud  or  bad  faith  on  his  part. 

It  is  clear  that  the  decision  of  the  Chief  Engineer  as  to  the  quantity 
or  quality  of  work  is  in  this  way  final  and  conclusive.  His  decision  as  to 
the  meaning  of  plans  and  Specifications  is  also  final  as  to  all  matters  of 
technical  character ;  the  testimony  of  any  other  engineer  or  expert  prob- 
ably would  not  be  accepted  to  gainsay  it,  in  the  absence  of  fraud  or  bad 
faith.  An  error  apparent  to  the  court  gathered  from  the  face  of  the  esti- 
mate or  Engineer's  decision  and  of  the  Contract,  taken  together,  may  be 
corrected  by  the  court,  which  thus  exercises  its  jurisdiction.  Upon  a  pure 
matter  of  law,  an  error  of  the  Chief  Engineer  apparent  on  the  face  of  his 
decision  and  the  Contract,  taken  together,  will  be  corrected  by  the  court 
in  the  exercise  of  its  jurisdiction.  In  a  case  where  a  question  of  law  is 
interwoven  or  combined  with  questions  of  fact  or  of  interpretation  of  the 
Specifications,  unless  an  error  of  the  Chief  Engineer  should  be  evident  on 
the  face  of  his  decision  and  the  Contract,  taken  together,  the  court  prob- 
ably will  not  accept  testimony  as  to  an  error  of  the  Chief  Engineer,  in 
the  absence  of  fraud  or  bad  faith  on  his  part. 

It  has  been  stated  that  the  court  ruled  in  one  case  that  where  the 
Contract  provided  that  the  decision  of  the  Chief  Engineer  shall  be  final, 
the  Court  could  not  set  this  aside  without  constructing  a  new  Contract. 
Along  the  line  of  this  decision,  it  follows  that  the  Chief  Engineer  can  not 
(even  as  the  court  can  not)  change  or  re-make  the  Contract,  and  a  deci- 
sion contrary  to  its  terms  will  be  set  aside  by  the  court,  which  still  reserves 
to  itself  the  right  to  decide  what  the  Contract  means.  The  Chief  Engineer 
should  clearly  appreciate  that  his  decision  must  be  under  the  terms  of  the 
Contract ;  that  he  cannot  add  to,  or  take  away  from,  the  clear  terms  thereof ; 
that  he  cannot  misinterpret  the  Contract  in  a  way  which  is  equivalent  to 
changing  it.  The  courts  will  not  be  ousted  of  their  jurisdiction  in  these 
matters. 

Whether  the  Chief  Engineer  has  power  to  determine  that  a  Contract 
has  been  broken  by  the  Contractor,  may  be  doubtful  from  a  theoretical 
legal  standpoint.  In  many,  perhaps,  most  cases,  his  decision  would  be 
final  as  to  the  events  and  facts  which  constituted  the  breach.  In  such 
cases,  the  court  would  assume  jurisdiction,  but  might  not  go  beyond  the 
testimony  of  the  Chief  Engineer  as  to  the  facts  which  constituted  the 
breach. 

As  a  matter  of  fact,  the  courts  have  frequently  allowed  the  decision 
of  the  Chief  Engineer  (or  similar  official)  to  be  overruled  for  fraud  or  bad 


UNIFORM   CONTRACT  FORM  16-51 

faith  or  because  of  mistake  when  the  Chief  Engineer  substituted  his  view 
of  justice  for  the  plain  provisions  of  the  Contract,  or  read  into  the  Con- 
tract things  not  there. 

General  business  cannot  be  carried  on  without  some  loss  due  to  un- 
reasonableness, or  to  dishonesty  in  the  purchaser.  The  merchant  must 
know  his  customer  or  else  meet  loss.  So  must  the  Contractor  and  so  must 
the  Company.  Unless  compelled  by  law  to  accept  the  lowest  bidder,  as 
is  the  case  with  some  municipalities,  but  not  with  railroads,  it  is  wise  to 
employ  only  those  Contractors  known  to  be  capable  and  square.  The 
Contractor,  however,  is  never  under  obligation  to  bid  on  a  Contract, 
and  should  not  bid  unless  the  invitation  is  from  responsible  and  decent 
parties. 

While  most  Chief  Engineers  of  railroads  are  fair  and  honest,  some  may 
be  dishonest,  and  others  are  unreasonable  and  fussy.  The  Contractor 
must  know  his  man  and  in  some  cases  refuse  to  bid,  or  bid  high  enough 
to  cover  this  risk  as  well  as  other  risks.  It  is  well  known  that  Contractors 
seldom  refuse  to  bid  on  work  where  it  is  provided  that  the  decision  of  the 
Chief  Engineer  shall  be  final,  and  some  prominent  Contractors  believe 
this  clause  necessary  and  proper.  That  the  prices  bid  are  somewhat  in- 
creased by  such  a  clause  seems  a  probable  outcome,  but  the  Companies 
are  justified  in  paying  such  increase  as  is  called  for  on  this  account. 

If  the  Chief  Engineer's  decision  is  not  to  be  final,  what  are  the  alterna- 
tives? One  is  submission  to  a  board  of  arbitrators,  generally  three.  An- 
other is  to  refer  any  disagreement  to  one  arbitrator  specified  by  name  in 
the  Contract.  A  third  is  a  trial  by  jury. 

A  board  of  three  arbitrators  is  expensive  where  expert  Engineers  are 
employed,  and  in  practice  it  is  found  that  one  arbitrator  protects  the  in- 
terests of  the  Company,  the  second  the  interests  of  the  Contractor,  and  the 
third  arbitrator  or  umpire  settles  contested  points  after  much  pulling  and 
hauling.  This  arrangement  has  often  proved  unsatisfactory. 

While  submission  to  a  single  arbitrator,  named  in  the  Contract,  seems 
attractive  at  first  sight,  yet  this  has  disadvantages.  It  suggests  dispute 
at  the  outset  if  any  benefit  to  either  party  is  likely  to  result,  and  in  view 
of  that  fact,  is  it  improbable  that  the  outcome  will  be  a  trial  of  wits  be- 
tween the  Contractor  and  the  Chief  Engineer,  who  in  this  case  is  no  longer 
an  arbitrator  whose  duty  is  to  deal  justly  between  the  Company  and  Con- 
tractor? Taking  Chief  Engineers  and  Contractors  as  you  find  them, 
will  either  the  Contractor  or  the  Contractor's  lawyer  stand  a  better  chance 
in  this  battle  of  wits  against  the  Chief  Engineer  and  Company's  lawyer, 
than  they  stand  now  when  the  Chief  Engineer  feels  the  responsibility  of 
dealing  fairly  between  the  railroad  and  the  Contractor? 

Submission  to  a  jury  is  full  of  uncertainties. 


16-52  UNIFORM  CONTRACT  FORM 

Most  Contracts  by  Civil  Engineers  now  provide  that  the  decision  of 
the  Chief  Engineer  shall  be  final.  The  American  Institute  of  Architects, 
after  very  careful  consideration,  favors  submission  to  arbitrators.  Their 
excellent  provision  for  this  may  be  found  in  their  Standard  Contract  Form 
in  the  chapter  on  Additional  Contract  Forms. 

Another  reading  which  is  often  used  in  Contracts  is  as  follows : 

A.  All  the  work  under  this  contract  shall  be  done  to  the  satisfaction  of  the 
Chief  Engineer,  who  shall  in  all  cases  determine  the  amount,  quality,  fitness  and  * 
acceptability  of  the  several  kinds  of  work  and  materials  which  are  to  be  paid  for 
hereunder,  and  shall  decide  all  questions  which  may  arise  as  to  the  fulfilment  of  the 
contract  on  the  part  of  the  Contractor,  and  his  decision  thereon  shall  be  final  and  con- 
clusive ;  and  such  determination  and  decision,  in  case  any  question  shall  arise,  shall 
be  a  condition  precedent  to  the  right  of  the  Contractor  to  receive  any  money  here- 
under. 

This  is  less  concise  than  Section  26  above,  but  has  much  to  commend 
it.  It  specifies  "  the  satisfaction  "  of  the  Chief  Engineer,  the  "  amount, 
quality,  fitness,  and  acceptability,"  and  the  "  decision  of  all  questions  " 
"  as  to  the  fulfilment,"  and  finally  makes  these  matters  "  a  condition  pre- 
cedent," and  taken  altogether  it  is  a  very  strong  clause  in  view  of  court 
decisions. 

B.  To  prevent  disputes  and  litigation,  the  Chief  Engineer  shall  be  the  referee 
to  decide  all  questions  which  may  arise  as  to  the  fulfillment  of  this  contract  on  the 
part  of  the  Contractor,  and  his  estimates  and  decisions  shall  be  final  and  conclusive. 
All  the  work  contemplated  and  described  in  this  contract  shall  be  done  to  the  satis- 
faction of  the  Chief  Engineer,  who  shall  be  sole  judge  as  to  the  fitness  of  materials. 

Since  the  law  touching  this  does  not  follow  the  rule  of  arbitration  but 
does  rest  on  the  "  condition  precedent  "  basis,  the  use  of  the  word  "  re- 
feree "  and  the  omission  of  the  "  condition  precedent  "  clause  make  this 
reading  seem  undesirable  as  well  as  less  complete  than  the  other  reading 
above. 

A  further  provision,  already  referred  to  under  Section  10,  is  sometimes 
attached  to  the  above. 

C.  The  Chief  Engineer  shall  have  the  right  of  correcting  any  errors  or  omissions 
in  the  plans  and  specifications  when  such  correction  is  necessary  for  the  proper 
fulfilment  of  their  intention,  the  action  of  such  correction  to  date  from  the  time 
that  the  Chief  Engineer  gives  due  notice  thereof. 

This  clause,  in  form  at  least,  seems  not  to  give  to  the  Chief  Engineer 
undue  power.  Corrections  necessary  for  the  work  should  be  possible. 
The  Contractor,  however,  should  not  be  the  one  to  yield  if  the  Chief  En- 
gineer is  incapable  in  his  drafting  of  the  Contract,  and  the  provision  as  to 
date  gives  reasonable  protection  to  the  Contractor.  Such  changes  can 


UNIFORM   CONTRACT  FORM  16-55 

hardly  alter  the  character  of  the  Contract.     They  are  corrections  rather 
than  "  changes  "  which  are  treated  under  Section  28.     Other  provisions 
somewhat  similar  in  character  may  be  found  under  Section  3. 
Another  form  has  a  clause  ending : 

D.  And  the  Chief  Engineer  shall  be  deemed  the  referee  of  both  parties  to  make 
such  determinations  and  directions. 

This  seems  undesirable  for  the  reasons  stated  under  B. 

In  some  Contracts,  where  the  definitions  of  Chief  Engineer  and  of 
Engineer  are  substantially  as  given  in  Section  24,  the  provision  is  made 
that  the  decision  of  the  Engineer  shall  be  final.  In  cases  like  the  New 
York  Water  Supply,  many  separate  divisions  of  the  work  are  of  great 
scope,  and  there  is  some  reason  for  placing  this  responsibility  upon  the 
Engineer  in  charge  of  each  division.  It  seems  desirable  in  this  case  that 
there  should  be  an  additional  definition  of  Resident  Engineer  or  Division 
Engineer  and  that  this  official  should  have  the  necessary  power,  rather 
than  the  Engineer  who  may  be  for  some  purposes  a  subordinate. 

Furthermore,  some  provision  should  be  made  for  the  absence  of  the 
Chief  Engineer,  and  the  following  shows  a  reading  already  in  use : 

E.  Any  engineer  substituted  by  the  Commission  in  place  of  the  Chief  Engineer 
during  the  absence,  illness  or  disability  of  the  Chief  Engineer,  or  when  the  Com- 
mission shall  so  determine,  shall,  during  his  official  connection,  have  all  the  power 
and  authority  of  the  Chief  Engineer  and  in  all  respects  be  recognized  as  such  Chief 
Engineer. 

A  somewhat  more  concise  form  is  suggested : 

F.  In  the  absence  or  disability  of  the  Chief  Engineer,  the  Company  may  desig- 
nate an  Acting  Chief  Engineer  who  may  exercise  all  the  powers  and  authority  of  the 
Chief  Engineer. 

This  should  be  added  to  Section  24. 

An  addition  should  also  be  made  to  Section  26  so  that  it  shall  read  : 

G.  ADJUSTMENT  OF   DISPUTE.    All  questions  and  controversies  which 
may  arise  between  the  Contractor  and  the  Company,  under  or  in  reference  to  this 
Contract,  shall  be  subject  to  the  decision  of  the  Chief  Engineer,  whose  decision  shall 
be  final  and  conclusive  upon  both  parties,  and  his  approval  shall  be  a  condition  pre- 
cedent to  the  acceptance  of  work  or  payment  of  money  either  of  which  is  involved 
in  such  decision. 

Sections  37  and  38  will  be  found  to  be  somewhat  strengthened  and  clari- 
fied by  this  addition,  which  is  important  so  far  as  Section  26  is  concerned. 
The  following  clause  or  its  equivalent  is  found  in  some  Contracts  : 

H.  The  decision  of  the  Chief  Engineer  shall  control  as  to  the  interpretation 
of  drawings  and  specifications  during  the  execution  of  the  work  under  them,  but  if 


16-54  UNIFORM   CONTRACT  FORM 

either  party  shall  consider  itself  aggrieved  by  any  decision  it  may  require  the  dispute 
to  be  finally  and  conclusively  settled  by  the  decision  of  arbitrators,  each  side  choos- 
ing one,  these  two  a  third  member,  and  the  decision  of  a  majority  to  be  final  and 
binding  upon  both  parties. 

As  has  been  stated,  many  Engineers  consider  arbitration  proceedings 
of  this  sort  fully  as  expensive  and  fully  as  unsatisfactory  as  a  trial  in 
court.  Furthermore,  questions  arise  involving  the  immediate  construc- 
tion of  work,  questions  which  cannot  wait.  A  clause  intended  to  cover 
this  contingency  is  as  follows: 

/.  All  questions  or  controversies  which  may  arise  between  the  Contractor  and 
the  Company  under  or  hi  reference  to  this  Agreement  shall  be  subject  to  the  decision 
of  the  Chief  Engineer,  which  shall  be  given  in  writing,  and  the  Contractor  will  per- 
form the  work  in  accordance  therewith. 

If  in  doing  the  work  according  to  such  decision  it  is  necessary  for  the  Contractor 
to  do  any  extra  work  or  any  work  not  called  for  by  this  agreement,  the  Company  will 
pay  an  equitable  amount  for  such  work. 

This  form  of  provision  failed  to  meet  the  approval  of  a  committee  of 
Engineers  to  whom  it  was  submitted.  It  opens  the  way  to  a  legal 
controversy. 

27.  ORDER  OF  COMPLETION;  USE  OF  COMPLETED  POR- 
TIONS. The  Contractor  shall  complete  any  portion  or  portions  of  the  work 
in  such  order  of  time  as  the  Engineer  may  require.  The  Company  shall  have 
the  right  to  take  possession  of  and  use  any  completed  or  partially  completed 
portions  of  the  work  notwithstanding  the  time  for  completing  the  entire  work 
or  such  portions  may  not  have  expired;  but  such  taking  possession  and  use 
shall  not  be  deemed  an  acceptance  of  the  work  so  taken  or  used  or  any  part 
thereof.  If  such  prior  use  increases  the  cost  of  or  delays  the  work,  the  Con- 
tractor will  be  entitled  to  such  extra  compensation,  or  extension  of  time,  or  both, 
as  the  Chief  Engineer  may  determine. 

This  appears  to  be  directed  not  primarily  to  the  order  in  which  work 
shall  be  done,  but  it  is  intended  to  cover  the  use  of  part  of  the  work  be- 
fore the  whole  is  completed.  In  most  Contracts  such  a  provision  is  un- 
necessary. It  applies  well  to  railroad  Contracts  in  many  cases,  and  may 
also  apply  to  highway  construction,  to  sewers,  to  waterworks  and  probably 
to  other  kinds  of  construction,  but  in  very  many  Contracts  such  a  pro- 
vision is  not  used. 

It  is  not  uncommon  to  make  the  following  provision  or  its  equivalent : 

A.  It  is  further  agreed  that  the  work  shall  be  carried  on  at  such  points,  and 
in  such  order  of  precedence,  and  at  such  times  and  seasons,  as  may  from  time  to 
tune  be  directed  by  the  Engineer. 

B.  At  such  points  and  in  such  order,  not  inconsistent  with  the  other  provisions 
of  the  contract,  as  the  Engineer  may  from  time  to  time  prescribe. 


UNIFORM  CONTRACT  FORM  16-55 

Ordinarily  this  would  read  Engineer  rather  than  Chief  Engineer,  mean- 
ing that  the  Engineer  upon  the  work  would  exercise  this  direction.  In 
some  cases  the  Chief  Engineer  might  be  specified. 

Where  no  use  is  to  be  made  of  the  work  earlier  completed  and  where 
interference  with  the  public  is  not  involved,  the  Contractor  should  be 
allowed  to  arrange  the  order  of  work  to  his  best  advantage  and  this  clause 
be  omitted. 

C.  The  Engineer  shall  have  no  power,  direction  or  control  over  the  work 
embraced  in  this  contract,  except  as  herein  expressly  set  forth,  or  as  may  hereafter 
be  voted  by  the  Commission.  ...     He  shall  have  power  to  specify,  order  or 
direct,  either  orally  or  in  writing,  the  manner  in  which  the  work  described  in  the 
specifications  shall  be  executed ;  but  such  power  and  authority  shall  not  extend  to 
the  actual  execution  of  the  work,  which  shall  be  in  the  sole  control  of  the  Contractor 
and  for  which  the  Contractor  alone  shall  be  responsible. 

Where  portions  of  the  work  are  used  before  the  completion  of  the 
whole,  the  cost  to  the  Contractor  will  in  some  cases  be  increased ;  in  others 
not.  The  Uniform  Contract  Form  allows  the  Chief  Engineer  to  deter- 
mine this.  The  Board  of  Water  Supply  of  the  City  of  New  York  has 
provided  in  one  case : 

D.  The  Board  reserves  the  right  to  let  water  into  the  .  .  .   siphons,  the  uptake 
and  downtake  chambers  and  the  by-pass  aqueduct,  as  soon  as  these  structures  are 
sufficiently  constructed  to  make  this  feasible,  and  to  use  said  structures  for  con- 
veying water  to  the  City,  irrespective  of  the  fact  that  other  parts  of  the  work  covered 
by  this  contract  may  not  be  completed.     The  Contractor  shall  regulate  the  progress 
of  his  work,  so  that  it  will  not  be  impeded  by  the  exercise  of  this  right  on  the  part 
of  the  Board,  and  he  shall  not  be  entitled  to  any  allowances  by  way  of  damages, 
because  of  the  filling  or  partial  filling  of  the  structures  with  water,  as  herein  provided. 

While  the  above  Contract  does  not  provide  that  the  Engineer  shall 
prescribe  the  order  of  the  work,  there  is  a  special  Contract  provision  cover- 
ing the  time  within  which  the  different  parts  of  the  work  shall  be  com- 
pleted. 

In  a  Contract  for  the  Rapid  Transit  Railroad  of  New  York,  specific 
provision  is  made  for  extra  compensation  where  stations  are  used  previous 
to  entire  completion.  The  Contract  is  for  "station  finish." 

E.  The  Railroad  or  a  portion  or  portions  thereof  may,  at  the  option  of  the 
Commission,  be  opened  and  operated  for  passenger  traffic  before  the  completion  of 
the  Works.     In  the  event  that  the  Railroad  or  any  portion  or  portions  thereof  are 
so  opened  and  operated  for  passenger  traffic  before  the  expiration  of  the  time  herein 
prescribed  for  the  completion  of  the  Works  or  before  the  expiration  of  the  period 
to  which  such  time  may  be  extended  as  provided  in  Chapter  VIII  by  resolution  of 
the  Commission,  the  prices  above  stipulated  in  the  Schedule  shall  be  increased  by 
per  centum  ( %)  for  the  station  finish  work  performed  after  the 


16—56  UNIFORM  CONTRACT  FORM 

date  of  such  opening  and  operating  for  passenger  traffic  at  each  station  so  opened 
and  used  for  passenger  traffic  and  at  each  portion  of  the  Railroad  between  stations 
so  opened  and  operated  for  passenger  traffic. 

28.  CHANGES.  The  Company  shall  have  the  right  to  make  any  changes 
that  may  be  hereafter  determined  upon,  in  the  nature  or  dimensions  of  the 
work,  either  before  or  after  its  commencement,  and  such  changes  shall  in  no 
way  affect  or  void  the  obligations  of  this  contract.  If  such  changes  make 
any  change  in  the  cost  of  the  work,  an  equitable  adjustment  shall  be  made  by 
the  Chief  Engineer  to  cover  the  same. 

A  provision  of  this  sort  is  very  common  and  should  be  a  part  of  every 
Contract.  If  there  is  such  a  provision  the  surety  will  be  held  although 
such  changes  are  made,  if  the  Bond  is  suitably  drafted.  It  should  be  under- 
stood, however,  that  the  changes  must  be  such  as  to  reasonably  "  modify  " 
the  original  Contract  and  not  such  as  to  virtually  "  substitute  "  a  new 
Contract.  A  court  would  doubtless  rule  that  a  virtually  new  Contract 
could  not  be  "  substituted,"  and  the  decision  of  the  Chief  Engineer  to  the 
contrary  would  not  avail.  The  error  of  the  Chief  Engineer  would  "  appear 
on  the  face  of  the  Contract  "  and  the  court  would  refuse  to  be  ousted  of 
its  jurisdiction.  Changes  which  do  more  than  modify  the  Contract  may 
of  course  be  made  by  written  agreement  between  the  parties,  but  the  sure- 
ties will  not  then  be  held  unless  they  also  consent,  and  their  consent  should 
be  in  writing.  Modifications  of  details  of  construction  would  not  re- 
quire any  action  under  this  clause.  The  following  clause  has  been  used 
with  relation  to  radical  changes : 

A.  No  correction  or  change  in  this  contract  shall  be  made  except  by  written 
instrument  duly  authorized  by  the  Commission  and  consented  to  by  the  Con- 
tractor and  by  the  sureties  upon  his  bond ;    but  this  provision  shall  not  limit  or 
affect  the  right  to  prescribe  variations  of  construction  as  in  this  contract  elsewhere 
provided. 

The  same  Commission  in  another,  but  earlier  Contract  provides  that : 

B.  The  Commission  shall  have  the  right,  during  the  progress  of  the  work,  to 
amplify  the  plans,  to  add  explanatory  specifications  and  to  furnish  additional  speci- 
fications and  drawings. 

Other  provisions  in  use  are  shown  below : 

C.  This  contract  and  the  specifications  herein  contained,  and  the  plans  herein 
referred  to,  may  be  modified  and  changed  from  time  to  time  as  may  be  agreed  in 
writing  between  the  parties  hereto,  in  a  manner  not  materially  affecting  the  sub- 
stance thereof  or  materially  changing  the  price  to  be  paid,  in  order  to  carry  out  and 
complete  more  fully  and  perfectly  the  work  herein  agreed  to  be  done  and  per- 
formed. 


UNIFORM   CONTRACT  FORM  16-57 

D.  The  Commission  further  reserves  the  right  to  change  the  location  and  to 
alter,  in  any  way  it  may  deem  necessary  for  the  public  interests,  the  drawings  afore- 
said, in  part  or  altogether,  at  any  time  during  the  progress  of  the  work,  without 
constituting  grounds  for  any  claim  by  the  Contractor  for  payment  or  allowance  for 
damages  or  extra  service  other  than  is  provided  for  items  of  the  different  classes  of 
construction  shown  in  the  schedule,  or  where,  in  the  opinion  of  the  Engineer,  not 
susceptible  of  classification,  then  as  otherwise  provided  herein. 

E.  The  Board  reserves  the  right  to  make  any  changes  in  the  specifications 
and  plans  which  may  be  deemed  necessary  either  before  or  after  beginning  any  work 
under  this  contract,  without  invalidating  this  contract ;    provided,  that  if  altera- 
tions are  made,  the  general  character  of  the  work  as  a  whole  is  not  changed  thereby. 
If  such  alterations  increase  the  quantity  of  work  to  be  done,  such  increase  shall  be 
paid  for  according  to  the  quantity  of  work  actually  done  at  the  unit  price  specified 
under  this  contract  for  each  class  of  work  performed.     If  such  alterations  diminish 
the  quantity  of  work  to  be  done,  they  shall  not  constitute  a  claim  for  damages  or 
for  loss  of  profits  on  the  work  to  be  dispensed  with  and  the  Board  shall  not  be  re- 
quired to  pay  for  work  or  material  omitted. 

The  latter  provisions  are  properly  covered  by  a  clause  as  to   prices, 
that  the  quantities  are  approximate,  etc. 
Another  form  is  this : 

F.  In  case  of  any  change  ordered  as  aforesaid,  or  in  case  any  other  changes  in 
the  work  are  made  by  the  mutual  consent  of  the  parties  hereto,  whether  affecting 
the  contract  price  or  not,  or  the  time  of  completion  or  not,  all  and  singular  the 
other  provisions  of  this  contract  shall  remain  in  force  and  apply  to  the  contract  as 
thus  altered. 

Whether  the  surety  would  be  relieved  of  liability  in  this  case  would 
depend  upon  whether  such  changes  were  radical  enough  to  essentially 
alter  the  character  of  the  Contract.  The  signing  of  a  formal  agreement 
to  the  change  would  tend  somewhat  to  relieve  the  surety  unless  his 
written  consent  was  also  had.  It  may  be  wise  to  secure  the  surety's 
consent  in  cases  where  it  is  not  clearly  necessary  legally. 

Somewhat  similar  readings  are  shown  below : 

G.  No  alteration  or  amendment  of  this  contract  shall  be  valid  unless  the  same 
is  made  by  an  instrument  in  writing  signed  by  the  Contractor  and  the  Engineer  and 
approved  by  a  vote  of  the  Commission. 

In  case  of  any  alterations,  so  much  of  this  agreement  as  is  not  necessarily 
affected  by  such  alterations  shall  remain  in  force  upon  the  parties  hereto. 

H.  It  is  further  agreed  that,  in  case  of  modification  or  alteration  or  addition 
to  this  contract,  so  much  of  this  contract  as  is  not  necessarily  affected  thereby  shall 
remain  in  full  force  and  binding  upon  the  parties  hereto ;  and  the  making  of  such 
modifications  or  alterations  in,  or  additions  to  this  contract  shall  not  release  the 
bondsmen,  or  Surety  Company,  from  liability  hereunder. 


16-58  UNIFORM   CONTRACT  FORM 

The  forms  touching  changes,  as  used  in  many  Contracts,  are  extensive 
and  elaborate,  and  need  not  be  cited  at  length  here.  A  not  uncommon 
reading  is : 

/.  The  Engineer  may  make  alterations  in  the  line,  grade,  plan,  form,  dimen- 
sions or  materials  of  the  work  or  any  part  thereof,  either  before  or  after  the  com- 
mencement of  construction. 

To  this  is  sometimes  added : 

J.  If  such  alterations  dimmish  the  quantity  of  work  to  be  done,  they  shall 
not  warrant  any  claim  for  damages  or  for  anticipated  profits  on  the  work  that  may 
be  dispensed  with ;  if  they  increase  the  amount  of  work,  such  increase  shall  be  paid 
for  according  to  the  quantity  actually  done  and  at  the  price  stipulated  for  such  work 
under  this  contract. 

The  Uniform  Contract  Form  is  simple  and  concise,  and  appears  to  be 
sufficient. 

29.  EXTRA  WORK.  No  bill  or  claim  for  extra  work  or  material  shall 
be  allowed  or  paid  unless  the  doing  of  such  extra  work  or  the  furnishing  of  such 

extra  material  shall  have  been  authorized  in  writing  by  the 

Engineer. 

The  price  for  such  work  shall  be  determined  by  the  Chief  Engineer,  who 
may  either  fix  a  unit  price  or  a  lump-sum  price,  or  may,  if  he  so  elects,  provide 
that  the  price  shall  be  determined  by  the  actual  cost,  to  which  shall  be  added 
per  cent,  to  cover  general  expense  and  superintendence,  profits,  con- 
tingencies, use  of  tools,  Contractor's  risk  and  liability.  If  the  Contractor  shall 
perform  any  work  or  furnish  any  material  which  is  not  provided  for  in  this  con- 
tract, or  which  was  not  authorized  in  writing  by  the  Engineer,  said  Contractor 
shall  receive  no  compensation  for  such  work  or  material  so  furnished,  and  does 
hereby  release  and  discharge  the  Company  from  any  liability  therefor. 

If  the  Contractor  shall  proceed  with  such  extra  work  or  the  furnishing  of 
such  extra  material  after  receiving  the  written  authority  therefor,  as  herein- 
before provided,  then  such  work  or  material,  stated  in  the  written  authority 
of  the  Engineer,  shall  be  covered,  governed  and  controlled  by  all  the  terms  and 
provisions  of  this  contract,  subject  to  such  prices  as  may  be  agreed  upon  or 
fixed  by  the  Chief  Engineer. 

If  the  Contractor  shall  decline  or  fail  to  perform  such  work  or  furnish  such 
extra  material  as  authorized  by  the  Engineer  in  writing,  as  aforesaid,  the 
Company  may  then  arrange  for  the  performance  of  the  work  in  any  manner  it 
may  see  fit,  the  same  as  if  this  contract  had  not  been  executed,  and  the  Con- 
tractor shall  not  interfere  with  such  performance  of  the  work. 

The  subject  of  extra  work  needs  very  careful  attention,  and  recent 
Contracts,  in  many  cases,  are  unduly  elaborate  and  extensive  in  their 
wording,  so  much  so  that  space  is  not  available  to  quote  them.  In  times 
past  Contractors  not  infrequently  made  bids  on  Contracts  where  their 
expectation  of  profit  rested  in  the  hope  of  large  allowances  for  extra  work, 
including  some  probability  of  a  lawsuit.  There  is  naturally  some  diffi- 


UNIFORM  CONTRACT  FORM  16—59 

culty  in  determining  the  actual  or  direct  cost  of  extra  work,  and  the  interests 
of  the  railroad  or  City  should  be  carefully  guarded.  On  the  other  hand, 
on  work  not  specifically  pointed  out  in  the  Contract,  the  Contractor  is 
entitled  to  a  fair  profit,  and  should  not  be  compelled  to  accept  in  advance 
a  price  fixed  by  the  Engineer,  which  may  prove  inadequate. 

Section  29,  above,  is  unusual  in  that  the^  extra  work  is  "  authorized  " 
rather  than  "  directed  "  or  "  ordered  "  which  is  the  more  common  custom. 
Ordinarily  the  Contractor  with  labor  and  plant  at  hand  can  do  the  work 
to  better  advantage  than  any  one  else.  The  railroad  or  City  should  have 
the  right  to  "  direct  "  the  Contractor  to  do  the  work,  and  conversely  the 
Contractor  should  have  the  right  to  do  it  if  he  wishes.  In  some  cases  of 
extra  work  the  City  or  railroad  can  do  the  work  to  better  advantage 
than  the  Contractor,  and  provision  should  be  made  for  this  contingency. 

The  following  reading  is  intended  to  include  most  of  the  desirable 
features  suggested  by  comparing  a  large  number  of  Contract  forms  touch- 
ing "extra  work."  For  convenience  of  discussion  below,  numbered  para- 
graphs are  used,  although  otherwise  the  matter  would  be  divided  into  three 
paragraphs  only  and  those  not  numbered. 

A.  1.  When  directed  in  writing  by  the  Engineer  to  do  so,  the  Contractor 
shall  furnish  material  and  do  extra  work  not  otherwise  provided  for  by  the  terms 
of  this  Contract  but  which  may  be  connected  with,  or  necessary  to,  the  proper  com- 
pletion of  the  work. 

2.  Such  material  and  work  shall  be  furnished  and  done  as  part  of  this  Contract 
and  subject  to  its  provisions,  and  at  such  prices  as  may  be  agreed  upon  by  the 
Engineer  and  the  Contractor. 

3.  If  prices  be  not  so  agreed  upon,  the  price  shall  be  determined  by  the  reason- 
able direct  cost  of  materials  and  labor  furnished  by  the  Contractor,  to  which 

shall  be  added per  cent  to  cover  general  expense  and  superintendence, 

profits,  contingencies,  use  of  tools  and  plant,  and  Contractor's  risk  and  liability. 

4.  The  direct  cost  may  include  a  reasonable  proportion  of  the  time  of  the  fore- 
man and  timekeeper,  as  well  as  establishment  charges  and  insurance. 

5.  The  Contractor  shall  furnish  evidence  of  cost  in  such  form  and  at  such 
times  as  the  Engineer  may  require.     In  the  absence  of  satisfactory  evidence  of  cost, 
the  Engineer  shall  determine  a  reasonable  price. 

6.  The  decision  of  the  Chief  Engineer  shall  be  final  as  to  the  direct  cost  of  ma- 
terials and  labor  or  as  to  reasonable  cost  or  price. 

7.  The  Contractor  shall  make  no  claim  for  extra  work  unless  it  be  ordered  in 
writing  by  the  Engineer,  nor  for  work  so  ordered  unless  an  account  be  presented  to 

the  Board  before  the day  of  each  month  following  that  during  which 

work  has  been  done  or  material  furnished  under  such  order. 

8.  Work  which  can  be  reasonably  classified  and  paid  for  at  the  unit  prices  spec- 
ified in  this  Contract  shall  not  be  regarded  as  extra  work. 

9.  If  agreed  to  by  the  Contractor,  the  Board  may  arrange  for  the  performance 
of  all  or  any  part  of  the  extra  work  by  other  parties  or  in  any  manner  it  may  see  fit, 
and  the  Contractor  shall  not  interfere  with  such  performance  nor  make  any  claim 
against  the  Board  because  of  such  performance. 


16—60  UNIFORM   CONTRACT  FORM 

Paragraph  1  somewhat  defines  "  extra  work,"  which  is  also  limited 
by  paragraph  8.  It  also  provides  for  direction  "  in  writing,"  which  is 
almost  universally  required,  and  which  paragraph  7  further  enforces. 
It  provides  that  the  extra  work  shall  be  "  directed  "  rather  than  "  author- 
ized." It  also  specifies  that  the  extra  work  shall  be  connected  with,  or 
necessary  to,  the  completion  of  the  work.  Other  work  altogether  dis- 
connected will  not  come  under  this  Contract  even  as  extra  work. 

Paragraph  2  specifies  the  extra  work  as  part  of  the  Contract  and  thus 
protected  by  the  Bond.  It  further  provides  for  fixing  prices  by  agreement, 
which  in  many  cases  is  more  satisfactory  both  to  Contractor  and  Engineer. 

Paragraph  3  provides  for  payment  by  cost  with  .  .  .  per  cent  added ; 
this  to  apply  in  cases  where  prices  are  not  agreed  upon.  There  are  many 
cases  where  the  extent  of  extra  work  cannot  be  foreseen  and  where  a  price 
in  advance  cannot  reasonably  be  fixed.  Ten  or  fifteen  per  cent  are  common 
figures  in  use  for  the  addition.  This  percentage  should  be  fixed  before 
bids  are  received  so  that  all  bids  may  be  on  the  same  basis.  One  form  in 
use  says : 

B.  Fifteen  per  cent  of  such  net  cost  for  the  use  of  tools  and  plant,  superin- 
tendence and  all  other  expenses  incidental  to  the  performance  of  such  work  and  the 
furnishing  of  such  material. 

Some  may  prefer  the  greater  simplicity  of  this  form.  It  does  not 
definitely  include  profits,  contingencies,  risk,  or  liabilities;  these  are  not 
"  expenses." 

The  "  reasonable  direct  "  cost  seems  better  than  "  actual  "  cost.  The 
actual  cost  to  the  Contractor  may  be  twice  what  it  ought  to  be,  if  the  Con- 
tractor buys  material  of  a  friend  and  the  City  pays  for  it.  The  use  of  the 
word  " reasonable"  seems  justified. 

The  cost  of  establishment  of  any  special  apparatus  or  appliances  should 
be  included  in  the  direct  cost,  together  with  insurance  on  materials  specially 
involved,  and  insurance  on  labor  which,  in  some  lines  of  construction^ 
amounts  to  as  much  as  8  per  cent  of  the  wages  paid  to  the  men.  Recent 
Contracts  often  include  a  clause  covering  such  insurance. 

Paragraph  4  recognizes  the  fact  that  doubt  may  exist  as  to  whether  a 
foreman  is  exercising  superintendence,  and  it  prevents  misunderstanding 
on  that  point. 

Paragraph  5  provides  some  safeguard  as  to  determining  costs.  Some 
Contract  forms  provide : 

C.  The  Contractor  shall  at  the  end  of  each  day  .  .  .  furnish  to  the  City 
daily  time  slips.  ...  If  required  by  the  City,  the  Contractor  shall  produce  any 
books,  vouchers,  records,  and  memoranda. 


UNIFORM   CONTRACT  FORM  16-61 

In  very  many  cases  this  red  tape  is  quite  unnecessary.  The  provision 
above,  that  the  Contractor  shall  furnish  evidence  of  cost,  etc.  allows  the 
Engineer  to  require  all  these  things  in  cases  where  it  is  found  to  be  neces- 
sary, and  to  dispense  with  such  action  in  simple  and  clear  cases.  The  re- 
fraining from  such  action  by  the  Engineer  may  in  some  cases  be  a  useful 
lever  to  secure  desired  results.  The  Contractor  must  furnish  "  satisfactory 
evidence  of  cost  "  ;  otherwise  the  Engineer  determines  reasonable  cost. 

Paragraph  6  gives  authority  to  the  Chief  Engineer,  rather  than  the 
Engineer,  to  determine  costs  or  prices  in  case  the  Engineer  questions  the 
evidence  of  cost  returned  by  the  Contractor,  or  in  case  the  Contractor  is 
dissatisfied  with  the  decision  of  the  Engineer.  While  many  Contractors 
will  object,  the  abuse  in  connection  with  extra  work  has  at  times  been 
very  acute,  and  the  railroad  or  City  is  justified  in  protecting  itself.  Ar- 
bitrary action  of  the  Chief  Engineer,  not  taken  in  good  faith,  will  be  set 
aside  by  a  court. 

Paragraph  7  covers  more  fully  the  necessity  for  the  written  order  and 
further  provides  for  the  prompt  presentation  of  the  account  for  the  extra 
work.  Claims  promptly  made  can  be  properly  investigated,  while  claims 
made  after  the  Contract  is  completed  cannot  be. 

The  requirement  of  a  written  order  requires  further  comment.  En- 
gineers very  commonly  fail  to  observe  it,  and  Contractors  fail  to  insist 
on  it.  A  systematic  failure  by  the  Engineer  to  observe  it  would  probably 
be  held  by  a  court  to  serve  as  a  waiver  of  this  provision,  and  a  court  might 
even  hold  that  a  single  failure  would  act  as  a  waiver.  In  the  stress  of  cir- 
cumstances, the  Contractor  often  will  and  should  start  extra  work  at 
once  on  an  oral  order,  but  the  written  order  should  follow  without  material 
delay,  even  at  some  inconvenience,  and  a  court  would,  doubtless,  hold 
this  to  be  compliance. 

Paragraph  8  largely  explains  itself.  The  word  "  reasonably  "  is  in 
favor  of  the  Contractor.  Work  of  special  difficulty  might  be  classed  as 
extra  work  even  if  possible  of  measurement  by  the  cubic  yard,  if  such  work 
be  not  definitely  covered  by  the  Contract  and  Specifications. 

Paragraph  9  is  desirable  because  cases  will  occur  where  the  railroad  or 
some  department  of  a  City  can  do  some  part  of  any  extra  work  to  better 
advantage  than  the  Contractor.  The  latter,  however,  should  not  be 
"  compelled  "  to  allow  other  parties  to  enter  upon  the  scene  of  his  work 
unless  provided  definitely  when  the  Contract  was  signed. 

The  phraseology  of  paragraph  1  varies  in  different  forms  used.  The 
following  illustrate  this : 

D.  The  Contractor  shall  perform  such  extra  work  as  the  Engineer  may  direct 
in  his  written  order  but  shall  not  perform  any  extra  work  unless  such  work  has  been 
ordered  by  the  Engineer  in  writing. 


16-62  UNIFORM   CONTRACT  FORM 

E.  The  Contractor  shall  do  any  work  not  herein  otherwise  provided  for  when 
and  as  ordered  in  writing  by  the  Chief  Engineer  or  his  agents  specially  authorized 
thereunto  in  writing. 

For  the  suitable  conduct  of  the  work  the  Engineer  must  have  authority 
to  give  the  order.  All  detail  work  should  be  in  the  hands  of  the  Engineer. 
The  Contractor  should  have  the  right  to  appeal  to  the  Chief  Engineer 
for  his  decision  in  cases  of  disagreement. 

It  is  impracticable  to  cite  many  variations  in  readings.  They  are  many 
and  often  long.  The  following  illustrates  this : 

F.  In  case  any  work  or  materials  shall  be  required  to  be  done  or  furnished  hi  or 
about  the  work  —  whether  specified  herein  or  indicated  on  the  plans  or  not  — 
which  in  the  opinion  of  the  Engineer  are  not  susceptible  of  classification  under  the 
Schedule  of  Unit  Prices,  the  Contractor  shall  and  will  if  ordered  by  the  Engineer  do 
and  perform  such  work  and  furnish  such  materials  at  and  for  the  actual  and  neces- 
sary net  cost  in  money  to  the  Contractor  for  labor  and  for  material,  where  new 
material  is  used,  and  in  addition  thereto  ten  (10%)  per  centum  of  such  net  cost  for 
the  use  of  tools  and  plant,  superintendence  and  all  other  expenses  incidental  to  the 
performance  of  such  work  and  the  furnishing  of  such  material,  and  the  Contractor 
shall  have  no  further  claim  in  excess  of  the  above ;  but  this  method  of  payment  shall 
not  apply  to  the  performance  of  any  work  or  the  furnishing  of  any  material  which 
in  part  or  hi  whole  is,  in  the  opinion  of  the  Engineer,  susceptible  of  classification 
under  such  schedule,  which  work  or  material  shall  be  paid  for  in  part  or  in  whole, 
as  the  case  may  be,  at  the  unit  price  given  in  such  schedule,  except  as  herein  other- 
wise expressly  provided. 

In  case  any  work  or  material  shall  be  required  to  be  done  or  furnished  under  the 
provisions  of  this  Article,  for  cost  plus  ten  (10%)  per  centum,  the  Contractor  shall 
at  the  end  of  each  day  during  the  progress  thereof  furnish  to  the  Engineer  daily 
time  slips  showing  the  name  and  number  of  each  workman  employed  thereon,  the 
character  of  work  he  is  doing  and  the  wages  paid  or  to  be  paid  to  him  and  also  a 
daily  memorandum  of  the  material  delivered  on  the  work  showing  the  amount  and 
character  of  such  material,  from  whom  purchased  and  the  amount  paid  or  to  be  paid 
therefor.  If  required,  the  Contractor  shall  produce  any  books,  vouchers,records  or 
memoranda  showing  the  work  and  materials  actually  paid  for  and  the  actual  prices 
therefor.  Such  daily  tune  slips  and  memoranda  shall  not,  however,  be  binding 
upon  the  City,  and  if  any  question  or  dispute  shall  arise  as  to  the  correct  cost  of  such 
work  or  material,  the  determination  of  the  Engineer  upon  such  question  or  dispute 
shall  be  final  and  conclusive. 

30.  PROPERTY  AND  RIGHT  OF  ENTRY.  The  Company  shall  pro- 
vide  the  lands  upon  which  the  work  under  this  contract  is  to  be  done,  except 
that  the  Contractor  shall  provide  land  required  for  the  erection  of  temporary 
construction  facilities  and  storage  of  his  material,  together  with  right  of  access 
to  the  same. 

The  Contractor  shall  not  ship  any  material  or  equipment  until  he  has  re- 
ceived written  notice  from  the  Engineer  that  he  may  proceed  with  said  work 
or  any  part  thereof. 


UNIFORM   CONTRACT  FORM  16-63 

This  section  is  especially  applicable  to  railroad  work,  but  may  be  per- 
tinent in  many  other  cases.  It  informs  the  Contractor  of  his  duty  to  pro- 
vide lands  for  storage  of  material  and  other  temporary  facilities.  The 
railroad  or  the  City  may  often  provide  these  at  his  request,  or  in  some 
Contracts  this  provision  may  be  omitted. 

The  provision  as  to  notice  before  shipping  material  may  be  necessary 
in  some  cases.  If  everything  is  ready  when  the  Contract  is  signed  this 
provision  seems  unnecessary,  but  the  notice  may  be  given  at  that  time. 

Another  Contract  form  provides  for  delivery  of  material  for  bridge 
construction : 

A.  It  is  agreed  that  the  Contractor  shall  notify  the  Engineer  in  writing  at  least 
ten  days  prior  to  the  time  when  the  superstructure  metal  work  included  in  this  con- 
tract will  be  ready  for  delivery,  and  that  said  Contractor  shall  not  deliver  any  of 
said  superstructure  metal  work  until  he  has  received  the  written  notification  of  the 
Engineer  so  to  do. 

31.  UNAVOIDABLE  DELAYS;  EXTENSION  OF  TIME  ON  PARTS 
OF  WORK.  If  the  Contractor  shall  be  delayed  in  the  performance  of  the  work 
from  any  cause  for  which  the  Company  is  responsible,  he  shall,  upon  written 
application  to  the  Chief  Engineer  at  the  time  of  such  delay,  be  granted  such 
extension  of  time  as  the  Chief  Engineer  shall  deem  equitable  and  just. 

Other  readings  are : 

A.  Should  the  Contractor  be  delayed  by  the  City  or  work  be  suspended  by  the 
City  for  any  cause,  there  shall  be  added  to  the  time  of  completion  a  time  equal 
to  any  or  all  such  delays  caused  by  the  City ;  but  the  Contractor  shall  not  be  entitled 
to  claim  damages  or  extra  compensation  for  such  delay  or  suspension. 

The  allowance  should  be  "  equivalent  "  time  rather  than  "  equal  " 
time.  Three  days  in  the  best  of  weather  are  equivalent  to  more  than  three 
days  late  in  the  fall  or  early  winter,  and  this  should  apply  in  the  case  of 
"  suspension  "  as  well  as  delay  of  work. 

Even  this  allowance  for  delay  is  inadequate  for  the  Contractor,  but  the 
possibility  of  delay  beyond  his  control  is  one  of  the  risks  he  assumes ;  and 
it  is  not  easy  to  write  a  clause  which  will  be  just,  and  satisfactory  to  both 
parties.  The  delay  for  which  the  Company  is  "  responsible  "  may  be 
essentially  beyond  its  control. 

Section  32  has  a  provision  for  suspension  of  work.  Many  engineers, 
however,  may  desire  to  use  the  clause  providing  against  damages  or 
compensation  on  account  of  delay. 

Another  form  includes  as  causes  justifying  extension  of  time : 

B.  Delay  on  the  part  of  railroads  in  transporting  material  consigned  to  said 
Board  (not  consigned  to    Contractor)  or  by  riot,  insurrection,    war,  pestilence, 
acts  of  public  authorities,  fire,  lightning,  earthquake,  cyclone,  or  through  acts  of 


16-64  UNIFORM   CONTRACT  FORM 

other  parties  under  contract  with  said  Board, but  no  allowance  will 

be  made  unless  a  claim  therefor  in  writing  is  presented  within  four  days  after  the 

commencement  of  such  delay Said  Chief  Engineer  shall  decide  the 

number  of  days  that  said  Contractor  has  been  so  delayed,  and  his  decision  shall  be 
final  and  binding  upon  both  parties  hereto. 

Another  form,  for  sewer  construction,  provides  for  such  extension : 

C.  If  delay  occurs  on  the  part  of  the  Board  in  furnishing  material  or  if  the  Con- 
tractor is  delayed  by  other  cause  which  is  not  his  fault,  the  Contractor  shall  have  no 
claim  for  damage  on  that  account,  but  the  time  for  completing  the  contract  shall  be 
extended  as  the  Engineer  shall  judge  necessary,  provided  the  Contractor  shall  notify 
him  of  the  delay  within  ten  days  of  its  occurrence. 

D.  As  the  Engineer  shall  certify  in  writing  to  be  just  in  case  of  delay  on  account 
of  cold  weather  or  flood  in  the  Ohio  river. 

In  many  Contracts  the  Contractor  should  have  extension  of  time  for 
delay  from  causes  beyond  his  control.  In  other  cases  any  delay  may  re- 
sult in  a  loss  to  the  railroad  or  City,  and  it  is  a  question  whether  the  rail- 
road or  the  Contractor  shall  stand  the  loss.  If  the  Contractor  assumes 
the  risk,  the  railroad  probably  pays  for  it  in  increased  price. 

32.   SUSPENSION  OF  WORK.    The  Company  may  at  any  time  stop  the 

work,  or  any  part  thereof,  by  giving days'  notice  to  the  Contractor 

in  writing.  The  work  shall  be  resumed  by  the  Contractor  in  ten  (10)  days 
after  the  date  fixed  in  the  written  notice  from  the  Company  to  the  Contractor 
so  to  do.  The  Company  shall  not  be  held  liable  for  any  damages  or  antici- 
pated profits  on  account  of  the  work  being  stopped,  or  for  any  work  done  during 
the  interval  of  suspension.  It  will,  however,  pay  the  Contractor  for  expense 
of  men  and  teams  necessarily  retained  during  the  interval  of  suspension,  pro- 
vided the  Contractor  can  show  that  it  was  not  reasonably  practicable  to  move 
these  men  and  teams  to  other  points  at  which  they  could  have  been  employed. 
The  Company  will  further  pay  the  Contractor  for  time  necessarily  lost  during 

such  suspension  at  the  rate  of per  cent,  per  annum  on  the  estimated 

value  of  materials,  equipment  and  fixtures  furnished  by  the  Contractor  on  the 

work  which  are  necessarily  idle  during  such  suspension,  said  rate  of 

per  cent,  per  annum  being  understood  to  include  depreciation,  interest  and 
insurance.  But  if  the  work,  or  any  part  thereof,  shall  be  stopped  by  the  notice 
in  writing  aforesaid,  and  if  the  Company  does  not  give  notice  in  writing  to  the 

Contractor  to  resume  work  at  a  date  within of  the  date  fixed  in 

the  written  notice  to  suspend,  then  the  Contractor  may  abandon  that  portion  of 
the  work  so  suspended  and  he  will  be  entitled  to  the  estimates  and  payments 
for  such  work  so  abandoned,  as  provided  in  Section  38  of  this  contract. 

Another  reading  given  below  shows  common  usage : 

A.  The  Contractor  shall  delay  or  suspend  the  progress  of  the  work  hereunder, 
or  any  part  thereof,  whenever  he  shall  be  so  required  by  written  order  of  the  Engi- 
neer, and  for  such  periods  of  time  as  the  Engineer  may  order,  provided,  that  in  the 


UNIFORM  CONTRACT  FORM  16-65 

event  of  such  delay  or  delays  or  of  such  suspension  or  suspensions  of  the  progress 
of  said  work,  the  time  for  the  completion  of  the  delivery  of  said  work  so  suspended, 
or  delayed  by  such  suspension  or  suspensions,  shall  be  extended  for  a  period  equiva- 
lent to  the  time  lost  by  reason  of  such  suspension  or  suspensions,  but  such  order  of 
the  Engineer  shall  not  otherwise  modify  or  invalidate  hi  any  way  any  of  the  provi- 
sions of  this  contract,  and  said  Contractor  shall  not  be  entitled  to  any  damages  or 
compensation  from  the  Board  on  account  of  such  delay  or  delays,  suspension  or 
suspensions. 

The  latter  form  seems  unfair  to  the  Contractor.  The  Owner  should 
pay  the  reasonable  cost  to  the  Contractor  if  the  work  is  suspended  for 
the  Owner's  benefit  and  to  the  Contractor's  disadvantage.  The  provi- 
sion of  Section  32  constitutes  an  effort  to  do  justice,  and  goes  far  in  that 
direction.  It  is  not  clear  that  it  makes  the  Contractor  whole.  He  makes 
no  profit  while  idle,  and  there  are  overhead  charges  which  continue  during 
the  period  of  suspension.  It  is  also  a  recognized  general  principle  that 
when  work  is  moving  well,  there  is  a  profit ;  where  work  is  dragging,  there 
is  a  loss  to  the  Contractor.  The  slowing  up  due  to  suspension  thus  means 
a  loss.  Furthermore  even  shoveling  is,  more  or  less,  skilled  labor,  and  after 
interruption  the  shoveling  force  picked  up  may  not  at  once  replace  in  quality 
the  force  laid  off. 

Suspension  thus  adds  another  "  risk  of  the  work  "  which  the  Contrac- 
tor must  figure  in  his  bid,  and  there  is  reason  in  his  statement  that  if  he 
should  bid  high  enough  to  cover  the  risks  taken,  he  would  seldom,  if  ever, 
land  a  Contract.  The  contingency  is  one  for  which  the  Company  is  re- 
sponsible, and  it  is  not  clear  that  the  Company  should  come  out  of  it  better 
than  the  Contractor.  Engineers  may  properly  consider  framing  a  sec- 
tion which  shall  even  better  protect  the  Contractor. 

The  following  reading  seems  more  favorable  to  the  Contractor,  but  does 
not  provide  for  anticipated  profits.  It  allows  the  Contractor  to  quit  if 
the  suspension  will  cut  into  his  profits  too  severely. 

B.  The  Company  reserves  the  right  to  suspend  operations  on  the  work  under 
this  contract  or  any  particular  part  or  parts  by  giving  the  Contractor  twenty  (20) 
days'  notice,  and  in  the  event  of  such  right  being  exercised,  the  Engineer  shall 
grant  to  the  Contractor  an  extension  of  tune  equivalent  to  the  time  of  suspension 
of  the  work.  It  is  further  understood  and  agreed  that  on  such  suspension  the 
Contractor  may  have  the  option  to  cancel  this  contract ;  or  if  the  Company  shall 
postpone  or  suspend  the  work  under  this  contract  indefinitely  or  altogether,  it  may 
cancel  this  contract,  which  it  reserves  the  right  to  do ;  then  in  either  case  of  can- 
cellation the  Engineer  shall  prepare  a  final  estimate  of  the  value  of  the  part  of  the 
work  done,  such  estimate  to  include  any  materials  purchased  and  delivered  to  the 
Contractor,  or  specially  designed  and  ordered  for  the  work  under  this  contract  the 
same  as  if  the  work  has  been  completed,  and  this  contract  shall  thereupon  be 
terminated.  All  materials  paid  for  and  included  in  such  final  estimate  that  are 
not  on  the  property  of  the  Company,  shall  be  delivered  to  the  Company  before  such 


16-66  UNIFORM   CONTRACT  FORM 

estimate  is  paid.  The  cancelling  of  this  contract  shall  not  entitle  the  Contractor 
to  any  claim  for  damages  or  for  anticipated  profits  on  the  unperformed  portion  of 
the  work ;  but  the  Chief  Engineer  shall  determine  upon  a  fair  and  equitable  com- 
pensation to  be  paid  the  Contractor  for  such  cancelling,  taking  into  consideration 
the  relative  value  of  the  work  done,  as  compared  with  the  whole  work  herein  con- 
tracted for,  and  the  expense  incurred  in  furnishing  tools  and  temporary  works  for 
the  prosecution  of  the  work  contracted  for. 

The  Uniform  Contract  Form  also  provides  that  after  a  period  of  delay 
specified  in  the  Contract,  the  Contractor  may  abandon  that  part  of  the 
work  suspended.  This  also  seems  only  fair. 

A  Contract  in  which  the  reasonable  interests  of  the  Contractor  are 
protected  is  not  contrary  to  the  interests  of  the  Company  in  the  long  run 
and  broadly  considered. 

Another  reading,  providing  only  for  extension  of  time,  is  this : 

C.  The  Commission  reserves  the  right  of  temporarily  suspending  the  execu- 
tion of  the  whole  or  any  part  of  the  work  herein  contracted  to  be  done,  if  it  shall  deem 
it  for  the  interests  of  the  City  so  to  do,  without  compensation  to  the  Contractor  for 
such  suspension  other  than  extending  the  time  for  completing  the  work  as  herein- 
before provided  as  much  as,  in  the  opinion  of  the  Commission,  it  may  have  been 
delayed  by  such  suspension.     The  length  of  time  (expressed  in  days  or  parts  of 
days)  during  which  the  work  or  any  part  thereof  has  been  delayed  by  any  act  or 
omission  on  the  part  of  the  City  (all  of  which  shall  be  determined  by  the  Commis- 
sion, which  shall  certify  to  the  same  in  writing  and  whose  determination  and  certifi- 
cate thereof  shall  be  binding  and  conclusive  upon  the  Contractor)  will  be  allowed 
to  the  Contractor,  and  the  time  for  the  completion  of  the  Works  shall  be  extended 
by  resolution  of  the  Commission  accordingly. 

It  has  been  stated  elsewhere  that  any  extension  of  time  for  suspension 
or  delay  should  be  equivalent  time  rather  than  equal  time. 
A  reading  differing  materially  in  detail  is  shown  below : 

D.  The  City,  on  account  of  public  necessity,  adverse  weather  conditions,  or  for 
other  reasons,  may  order  all  work  suspended,  and  thereupon  the  Contractor  shall 
neatly  pile  up  all  materials,  provide  and  maintain  board  walks  and  crossings  and 
take  other  means  to  properly  protect  the  public  and  the  work  and  to  facilitate 
traffic.     In  case  of  such  stoppage  of  work,  the  time  allowed  for  the  completion  of  the 
work  shall  be  extended  in  an  amount  equal  to  that  lost  by  the  Contractor  in  such 
manner,  but  the  Contractor  shall  be  entitled  to  no  additional  claim  for  damages. 

33.  (a)  EXPEDITING  WORK,  CORRECTING  IMPERFECTIONS. 
If  the  Chief  Engineer  of  the  Company  shall  at  any  time  be  of  the  opinion  that  the 
Contractor  is  neglecting  to  remedy  any  imperfections  in  the  work,  or  is  not  pro- 
gressing with  the  work  as  fast  as  necessary  to  insure  its  completion  within  the 
time  and  as  required  by  the  contract,  or  is  otherwise  violating  any  of  the  provi- 
sions of  this  contract,  said  Chief  Engineer,  in  behalf  of  the  Company,  shall  have 
the  power,  and  it  shall  be  his  duty  to  notify  the  Contractor  to  remedy  such  im- 


UNIFORM   CONTRACT  FORM  16-67 

perfections,  proceed  more  rapidly  with  said  work,  or  otherwise  comply  with 
the  provisions  of  this  contract. 

(b)  ANNULMENT.     In  such  case  the  Company  may  give  the  Contractor 
ten  (10)  days'  written  notice,  and  at  the  end  of  that  time,  if  the  Contractor 
continues  to  neglect  the  work,  the  Company  may  provide  labor  and  materials 
and  deduct  the  cost  from  any  money  due  the  Contractor  under  this  agreement ; 
and  may  terminate  the  employment  of  the  Contractor  under  this  agreement 
and  take  possession  of  the  premises  and  of  all  materials,  tools  and  appliances 
thereon,  and  employ  such  forces  as  may  be  necessary  to  finish  the  work.     In 
such  case  the  Contractor  shall  receive  no  further  payment  until  the  work  shall 
be  finished,  when,  if  the  unpaid  balance  that  would  be  due  under  this  contract 
exceeds  the  cost  to  the  Company  of  finishing  the  work,  such  excess  shall  be 
paid  to  the  Contractor ;  but  if  such  cost  exceeds  such  unpaid  balance,  the  Con- 
tractor shall  pay  the  difference  to  the  Company. 

(c)  COMPANY  MAY  DO  PART  OF  WORK.    Upon  failure  of  the  Con- 
tractor to  comply  with  any  notice  given  in  accordance  with  the  provisions  hereof, 
the  Company  shall  have  the  alternative  right,  instead  of  assuming  charge  of 
the  entire  work,  to  place  additional  forces,  tools,  equipment,  and  materials 
on  parts  of  the  work  for  the  purpose  of  carrying  on  such  parts  of  the  work, 
and  the  cost  incurred  by  the  Company  in  carrying  on  such  parts  of  the  work 
shall  be  payable  by  the  Contractor,  and  such  work  shall  be  deemed  to  be  carried 
on  by  the  Company  on  account  of  the  Contractor,  and  the  Contractor  shall  be 
allowed  therefor  the  contract  price.    The  Company  may  retain  the  amount  of 

the  cost  of  such  work,  with per  cent,  added,  from  any  such  sum 

or  sums  due  or  to  become  due  the  Contractor  under  this  agreement. 

In  case  of  annulment  for  neglect,  the  burden  of  proof  will  be  upon  the 
Company  to  establish  the  neglect. 

In  33  (6)  it  may  be  wise  to  make  the  reading  in  the  third  and  fourth 
lines  as  follows : 

A.  provide  labor,  materials,  tools  and  appliances,  by  contract  or  otherwise, 
and  deduct,  etc. 

as  is  done  in  several  forms  as  to  carrying  on  the  work  by  Contract  or  other- 
wise. The  desired  action  is  probably  included  in  the  clause  "  employ 
such  forces  as  may  be  necessary  to  complete  the  work,"  but  a  more  specific 
statement  has  some  value. 

The  following  form  includes  many  features  common  to  a  number  in 
use  and  in  somewhat  different  phraseology  from  that  given  above : 

B.  If  the  work  to  be  done  under  this  contract  shall  be  abandoned  by  the  Con- 
tractor, or  if  this  contract  or  any  part  thereof  shall  be  assigned  or  the  work  sub-let 
by  him  without  the  previous  written  consent  of  the  City,  or  if  at  any  time  any  offi- 
cial of  the  City  or  employee  thereof  shall  become  directly  or  indirectly  interested  in 
this  contract  or  in  furnishing  the  supplies  or  performing  the  work  thereunder,  or 
in  any  portion  of  the  profit  thereof ;  or  if  at  any  time  the  City  shall  be  of  the  opinion 
that  the  performance  of  the  contract  is  unnecessarily  or  unreasonably  delayed,  or 
that  the  Contractor  is  wilfully  violating  any  of  the  provisions  of  this  contract ;  or  if 


16-68  UNIFORM   CONTRACT  FORM 

the  work  be  not  fully  completed  within  the  time  named  in  this  contract ;  then,  and 
in  any  such  case,  the  City  may  notify  the  Contractor  in  writing  to  discontinue  all 
work  or  any  part  thereof,  and  thereupon  the  Contractor  shall  discontinue  the  work 
or  such  part  thereof  as  may  be  designated,  and  the  City  may  thereupon  according 
to  law  enter  upon  and  take  possession  of  the  work  or  part  thereof,  complete,  or  cause 
the  same  to  be  completed,  and  charge  the  entire  expense  of  so  completing  the  work 
or  part  thereof  to  the  Contractor ;  and  for  such  completion,  the  City  for  itself  or 
for  its  Contractors  may  take  possession  of  and  use  or  cause  to  be  used  any  materials, 
machinery  or  tools  of  every  description  provided  by  the  Contractor  for  the  pur- 
poses of  this  work,  and  may  procure  or  cause  to  be  procured  other  materials,  machin- 
ery or  tools  for  the  completion  of  the  work,  and  charge  the  cost  and  expense  thereof 
to  the  Contractor. 

All  expenses,  including  those  of  re-letting,  incurred  and  charged  under  these 
clauses  or  by  virtue  of  this  contract,  shall  be  deducted  and  paid  by  the  City  out  of 
any  moneys  then  due  or  to  become  due  the  Contractor  under  and  by  virtue  of  this 
contract  or  any  part  thereof.  In  case  such  expense  shall  exceed  the  amount  which 
would  have  been  payable  under  the  contract  if  the  same  had  been  completed  by  the 
Contractor,  the  Contractor  or  his  sureties  shall  pay  the  amount  of  excess  to  the 
city ;  but  should  such  expense  be  less  than  the  amount  payable  under  this  contract 
had  the  same  been  completed  by  the  Contractor,  he  shall  receive  the  difference, 
after  deducting  the  amount  retained  as  hereinafter  specified,  but  shall  not  be  en- 
titled to  damages  for  not  being  allowed  to  complete  the  work  himself. 

It  is  not  feasible  to  include  the  various  readings,  which  are  mostly 
long.  Some  special  features  and  wordings  may,  however,  be  of  interest 
and  value ;  for  example : 

C.  Thereupon  the  said  Board  shall  have  the  power  to,  and  may  at  the  cost  of 
said  Contractor,  either  complete  the  said  work  by  contract  or  itself  do  the  work 
provided  for  hereunder  by  employing  such  men  and  teams,  and  by  purchasing  or 
otherwise  obtaining  such  materials,  supplies,  machinery,  implements,  tools,  and 
plant  as  the  said  Chief  Engineer  shall  deem  necessary  .  .  .  and  may  use  ...  such 
materials  ...  as  may  be  the  property  of  said  Contractor,  and  may  make  the 
necessary  repairs  and  replacements  thereto,  etc. 

D.  When  any  particular  part  of  the  work  is  being  carried  on  by  the  Board, 
by  contract  or  otherwise,  under  the  provision  of  this  article  of  the  contract,  the 
Contractor  shall  continue  the  remainder  of  the  work  in  conformity  with  the  terms 
of  this  contract,  and  in  such  manner  as  in  no  wise  to  hinder  or  interfere  with  the 
persons  or  workmen  employed,  as  above  provided,  by  the  Board,  etc. 

Another  form  gives  the  right : 

E.  To  use  such  implements,  tools  and  materials  of  every  description  as  may  be 
found  upon  the  site  of  said  work,  and  to  procure  other  tools  and  materials  for  the 
completion  of  the  same. 

Other  forms  provide  for  taking  over  the  work : 

F.  If  the  Contractor  shall  become  insolvent  or  bankrupt,  or  if  his  property 
or  affairs  shall  be  put  in  the  hands  of  a  receiver  or  receivers. 


UNIFORM  CONTRACT  FORM  16-69 

G.  If  the  Contractor  shall  lose  control  of  said  work  for  any  cause  whatsoever 
except  by  act  of  God  or  the  public  enemy,  or  if  the  Contractor  shall  refuse  or 
neglect  to  follow  the  instructions  of  the  Engineer. 

H.  If  in  the  opinion  of  the  Chief  Engineer  the  Contractor  is  guilty  of  careless- 
ness or  incompetency  in  the  execution  of  the  work. 

Another  phrase  in  common  use  is : 

/.   Or  is  not  executing  the  work  in  good  faith. 

A  sewer  Contract  form  provides  that  the  Board : 

J.  May  take  possession  of  ...  materials,  animals,  machinery,  implements, 
centers,  forms  and  tools  of  every  description. 

Another  provision  is  that  in  case  of  taking  away  work : 

K.  The  Board  shall  not  be  held  to  obtain  the  lowest  figure  for  the  work  of  com- 
pleting the  contract. 

It  should  be  remembered  that  the  provision  requiring  this  in  the  original 
letting  is  for  the  benefit  of  the  taxpayer  and  not  of  the  Contractor. 
Another  uses  the  words : 

L.   Employ  such  persons  and  obtain  such  appliances  and  tools,  etc. 

One  Contract  form  provides  that : 

M.  The  Board  shall  have  a  lien  upon  all  the  materials,  supplies,  machinery, 
implements  and  tools  of  the  Contractor. 

This  provision  may  be  important  in  case  of  financial  inability  of  the 
Contractor  and  possible  attachment  of  his  property.  From  this  stand- 
point it  would  be  wise  to  add : 

N.  Such  lien  to  attach  at  the  time  of  notice  by  the  Chief  Engineer  to  the  Con- 
tractor to  improve  his  execution  of  the  contract. 

This  additional  provision  would  not  hinder  at  all  the  Contractor's  per- 
formance, but  would  prevent  any  action  by  him  to  place  his  plant  beyond 
the  control  of  the  City  or  railroad  after  notification. 

With  relation  to  the  clause  providing  for  the  payment  by  the  Contrac- 
tor for  the  work  done  by  the  railroad  or  City  under  this  section,  the  follow- 
ing readings  are  of  interest : 

0.  Such  expense  to  be  paid  by  the  Contractor  shall  not  exceed  the  amount 
of  the  security  for  the  performance  of  this  contract. 

P.  Such  excess  shall  not  exceed  the  amount  owed  by  the  Board,  under  this 
contract,  at  the  time  the  Contractor  is  notified  to  discontinue  said  work,  or  any 


16-70  UNIFORM  CONTRACT  FORM 

part  thereof,  plus  the  amount  of  the  bond  executed  by  the  Contractor  for  the  per- 
formance of  the  contract. 

Such  provisions  are  omitted  in  many  forms. 

In  one  form  in  use,  however,  provision  is  made  even  for  selling  all  the 
plant  of  the  Contractor  to  cover  any  excess  of  cost. 

The  phrase  "  neglecting  to  remedy  imperfections  "  in  the  Uniform  Con- 
tract Form  is  unusual,  but  rather  desirable.  The  opportunity  given  the 
Contractor  to  mend  his  ways  after  notice  is  also  desirable  and  in  the  line 
of  fair  play. 

The  clause  relating  to  any  City  employee  becoming  directly  or  in- 
directly interested  in  the  Contract  seems  desirable  in  City  Contracts ;  it 
is  inapplicable  for  railroads.  Specifying  "the  power  and  duty"  of  the 
Chief  Engineer  to  notify,  is  a  definite  and  wise  provision.  An  alternative 
provision  is  as  follows : 

Q.   Or  if  at  any  time  the  Chief  Engineer  shall  be  of  the  opinion  and  shall 

so  certify  in  writing  to  the  Board,  that  the  conditions are  not  fulfilled  etc. 

the  Board  may  notify  the  Contractor. 

Here  the  Board  notifies,  rather  than  the  Chief  Engineer. 

34.  (a)  ANNULMENT  WITHOUT  FAULT  OF  CONTRACTOR.  The 
Company  shall  have  the  right  at  any  time,  for  reasons  which  appear  good  to  it, 
to  annul  this  contract  upon  giving  thirty  days*  notice  in  writing  to  the  Contrac- 
tor, in  which  event  the  Contractor  shall  be  entitled  to  the  full  amount  of  the 
estimate  for  the  work  done  by  him  under  the  terms  and  conditions  of  this 
contract  up  to  the  time  of  such  annulment,  including  the  retained  percentage. 
The  Contractor  shall  be  reimbursed  by  the  Company  for  such  expenditures  as 
in  the  judgment  of  the  Chief  Engineer  are  not  otherwise  compensated  for,  and 
as  are  required  in  preparing  for  and  moving  to  and  from  the  work ;  the  intent 
being  that  an  equitable  settlement  shall  be  made  with  the  Contractor. 

(b)  NOTICE  —  HOW  SERVED.     Any  notice  to  be  given  by  the  Company 
to  the  Contractor  under  this  contract  shall  be  deemed  to  be  served  if  the  same 
be  delivered  to  the  man  in  charge  of  any  office  used  by  the  Contractor,  or  to  his 
foreman  or  agent  at  or  near  the  work,  or  deposited  in  the  postoffice,  postpaid, 
addressed  to  the  Contractor  at  his  last  known  place  of  business. 

(c)  REMOVAL    OF    EQUIPMENT.     In  case  of  annulment  of  this  con- 
tract before  completion  from  any  cause  whatever,  the  Contractor,  if  notified  to 
do  so  by  the  Company,  shall  promptly  remove  any  part  or  all  of  his  equipment 
and  supplies  from  the  property  of  the  Company,  failing  which  the  Company 
shall  have  the  right  to  remove  such  equipment  and  supplies  at  the  expense  of 
the  Contractor. 

The  provision  allowing  the  Company  to  annul  the  Contract  without 
fault  or  default  on  the  part  of  the  Contractor  is  unusual  except  in  rail- 
road Contracts,  where  it  has  not  been  unusual  to  have  a  change  of  policy 
in  relation  to  construction. 


UNIFORM   CONTRACT  FORM  16-71 

Whether  this  clause  is  fair  to  the  Contractor  is  doubtful.  There  is 
an  apparent  intent  to  treat  him  fairly.  Some  Contractors,  not  without 
reason,  think  that  anticipated  profits  should  be  included.  The  Contrac- 
tor may  have  had,  at  the  time  he  bid,  opportunity  for  another  profitable 
Contract,  which  he  turned  down.  Anticipated  profits,  however,  are  diffi- 
cult to  estimate,  and  if  allowed  and  paid,  the  Contractor  may  promptly 
secure  another  equally  favorable  Contract  and  so  double  his  profits. 

In  case  of  annulment  without  fault  of  the  Contractor,  there  may  be 
some  doubt  whether,  after  the  transaction  is  closed,  the  decision  of  the 
Chief  Engineer  ought  to  be  made  final  as  to  the  allowance  to  be  made  to 
the  Contractor.  Any  question  as  to  maintaining  control  of  the  work 
is  now  eliminated.  It  is  possible  that  arbitration  may  be  appropriate  in 
this  case  if  agreement  is  not  reached.  Engineers  who  incline  to  look 
favorably  on  arbitration  may  find  it  desirable  here,  even  if  undesirable  in 
general.  The  expense  and  other  unsatisfactory  features  of  arbitration  will 
lead  other  Engineers  to  reject  arbitration  even  here.  Most  Companies  and 
their  Chief  Engineers  would  probably  insist  on  restricting  any  award 
so  that  anticipated  profits  should  not  be  allowed.  Cases  of  annulment 
are  probably  rare  except  in  railroad  work  where  the  Contractor  has 
knowledge,  at  the  time  of  making  his  bid,  of  the  possibility  or  probability 
of  such  action,  so  that  the  risk  in  its  occurrence,  as  a  practical  matter, 
would  usually  be  slight. 

The  difficulty  of  determining  the  reimbursement  proper  in  any  case  is 
due  in  considerable  part  to  a  faulty  system  of  bidding.  In  many  Contracts 
there  is  a  large  expense  for  establishment,  temporary  structures,  deprecia- 
tion on  plant,  and  other  overhead  charges.  The  direct  unit  cost  of  the 
various  items  in  the  Proposal  can  be  closely  computed  in  advance.  Upon 
each  of  the  items,  however,  must  be  saddled  a  part  of  these  overhead 
charges.  The  Contractor,  probably  wisely,  often  puts  a  larger  propor- 
tion on  those  items  on  which  monthly  payments  will  be  made  earliest  or 
upon  those  which  are  likely  to  be  increased  in  amount.  A  system  of  bid- 
ding is  desirable  which  will  allow  a  direct  bid  on  establishment,  etc. ;  this 
will  tend  to  cure  the  difficulties  due  to  annulments,  and  the  somewhat 
similar  troubles  due  to  increase  or  decrease  of  quantities  from  those  form- 
ing the  basis  of  the  Proposal.  It  will  also  give  better  control  over  un- 
balanced bids. 

Section  34  (6)  seems  not  appropriate  as  a  part  of  a  section  on  annul- 
ment. It  is  general  in  character,  applying  to  all  notices  to  the  Contractor. 

It  seems  questionable  whether  notice  "  to  the  man  in  charge  of  any 
office  used  by  the  Contractor  "  is  notice  to  a  man  of  sufficient  responsibility, 
in  the  important  case  of  the  annulment  of  a  Contract,  and  the  same  is  true 
of  "  his  foreman."  Either  the  notice  should  be  mailed  to  the  Contractor's 


16-72  UNIFORM   CONTRACT  FORM 

address,  or  the  Contract  should  require  him  to  specify  an  agent,  manager, 
or  foreman  upon  whom  notice  should  be  served. 

Whatever  be  the  requirements  as  to  notice  or  the  like,  they  should  be 
scrupulously  followed.  The  annulment  is  for  the  benefit  of  the  Company, 
and  the  courts  would  be  likely  to  insist  upon  thorough  compliance  with  the 
terms  not  only  as  to  notice,  but  also  as  to  the  report  of  the  Chief  Engineer 
with  relation  to  reimbursement,  which  should  be  a  formal  written  report. 

The  following  reading  applies  to  notices : 

A.  The  address  given  in  the  bid  or  proposal  upon  which  this  contract  is  founded 
is  hereby  designated  as  the  place  where  all  notices,  letters  and  other  communica- 
tions to  the  Contractor  shall  be  mailed  and  delivered.     The  delivering  at  the 
above  named  place  or  depositing  in  a  post-paid  wrapper  directed  to  the  above  place, 
in  any  post-office  box  regularly  maintained  by  the  post-office,  of  any  notice,  letter, 
or  other  communication  to  the  Contractor,  shall  be  deemed  sufficient  service  thereof 
upon  the  Contractor,  and  the  date  of  such  service  shall  be  the  date  of  such  delivery 
or  mailing.     Such  address  may  be  changed  at  any  time  by  an  instrument  in  writing 
executed  and  acknowledged  by  the  Contractor  and  delivered  to  the  Board.     Nothing 
herein  contained  shall  be  deemed  to  preclude  or  render  imperative  the  service  of 
any  notice,  letter  or  other  communication  upon  the  Contractor  personally. 

A  somewhat  more  condensed  clause  is  suggested  for  consideration : 

B.  Notice  may  be  given  either  by  delivery  to  some  agent  or  person  who  has  been 
designated  in  writing  by  the  Contractor  for  that  purpose ;  or  by  mailing  the  notice 
to  the  address  given  by  the  Contractor  in  his  bid,  or  to  a  later  address  in  writing 
delivered  to  the  Board  for  that  purpose.     The  date  of  notice  shall  be  the  date  of 
delivery  or  of  mailing.     Delivery  or  mailing  of  notice  to  any  partner  shall  be 
notice  to  the  partnership.     If  the  Contractor  is  a  corporation  it  shall  specify  in  writ- 
ing the  officer  or  person  upon  whom  notice  shall  be  served. 

There  is  a  difference  between  notice  and  instructions,  and  a  clause 
similar  to  that  below  should  be  added  to  the  clause  as  to  notice : 

C.  The  Contractor  shall   employ  suitable  superintendents  and  foremen  to 
represent  him  at  different  parts  of  the  work,  and  they  shall  receive  and  obey  orders 
from  the  Engineer. 

Another  more  elaborate  reading  follows : 

D.  Orders  and  directions  may  be  given  orally  by  the  Engineer  to,  and  shall  be 
received  and  promptly  obeyed  by,  the  Contractor  or  his  representative  or  any  super- 
intendent, overseer  or  foreman  of  the  Contractor  who  may  have  charge  of  the 
particular  work  in  relation  to  which  the  orders  or  directions  are  given,  and  a  con- 
firmation in  writing  of  such  orders  or  directions  will  be  given  to  the  Contractor  by 
the  Engineer  if  so  requested.     The  Contractor  or  his  duly  authorized  representative 
shall  be  present  at  all  times  on  the  work  to  receive  orders  and  directions  from  the 
Engineer. 


i 


UNIFORM   CONTRACT  FORM  16-73 

This  seems  to  have  no  special  advantage  unless  it  be  the  written  order 
if  requested.  In  the  case  of  a  written  order  it  should  be  made  clear  whether 
"  extra  work  "  is  intended. 

35.  FAILURE    TO    MAKE    PAYMENTS.     Failure  by  the  Company  to 
make  payments  at  the  times  provided  in  this  agreement  shall  give  the  Con- 
tractor the  right  to  suspend  work  until  payment  is  made,  or  at  his  option,  after 
thirty  (30)  days'  notice  in  writing,  should  the  Company  continue  to  default, 
to  terminate  this  contract  and  recover  the  price  of  all  work  done  and  materials 
provided  and  all  damages  sustained,  and  such  failure  to  make  payments  at  the 
times  provided  shall  be  a  bar  to  any  claim  by  the  Company  against  the  Con- 
tractor for  delay  in  completion  of  the  work  due  to  such  suspension  or  failure 
to  pay. 

36.  MONTHLY    ESTIMATE.     So  long  as  the  work  herein  contracted 
for  is  prosecuted  in  accordance  with  the  provisions  of  this  contract,  and  with 
such  progress  as  may  be  satisfactory  to  the  Chief  Engineer,  the  said  Chief 
Engineer  will  on  or  about  the  first  day  of  each  month,  make  an  approximate  esti- 
mate of  the  proportionate  value  of  the  work  done  and  of  material  furnished  or 
delivered  upon  the  Company's  property  at  the  site  of  the  work,  up  to  and  in- 
cluding the  last  day  of  the  previous  month.     The  amount  of  said  estimate, 

after  deducting per  cent,  and  all  previous  payments,  shall  be  due 

and  payable  to  the  Contractor  at  the  office  of  the  Treasurer  of  the  Company  on 
or  about  the day  of  the  current  month. 

These  two  sections  may  be  considered  together.  The  provision  for 
monthly  estimates  may  properly  precede  the  provision  as  to  the  failure  to 
pay. 

Considering  Section  36,  it  seems  that  a  definite  date  for  payment 
should  be  stated  if  the  Contractor  is  to  have  a  right  to  suspend  work  for 
non-payment.  The  estimate  made  "  on  or  about  "  the  first  of  the  month 
is  reasonable  although  indefinite,  but  the  payment  should  be  due  at  some 
specific  time. 

In  the  third  line  there  should  be  added,  after  "  make,"  the  words 
"  and  approve/'  so  that  the  reading  will  be : 

A.  The  Chief  Engineer  will  .  .  .  make  and  approve  an  approximate  estimate. 

The  moneys  will  not  then  be  due  without  such  approval.  Under  the 
reading  of  Section  36,  such  approval  will  depend  upon  prosecution  "  in 
accordance  with  the  terms  of  this  Contract  "  combined  with  "  satisfactory 
progress."  Before  commenting  upon  this  feature  other  readings  may  be 
cited : 

B.  In  order  to  assist  the  Contractor  to  prosecute  the  work  advantageously  the 
Engineer  shall,  from  time  to  time  as  the  work  progresses,  but  not  more  often  than 
once  a  month,  make  in  writing  an  estimate,  such  as  in  his  opinion  shall  be  just  and 
fair,  of  the  amount  and  value  of  the  work  done  and  materials  incorporated  in  the 


16-74  UNIFORM  CONTRACT  FORM 

work  by  the  Contractor  according  to  the  terms  of  this  contract  (but  it  is  understood 
that  in  making  such  estimates  the  Engineer  shall  not  necessarily  be  governed  by 
the  prices  contained  in  the  Schedule),  provided,  however,  that  estimates  may  at 
any  time  be  withheld  or  reduced  if,  hi  the  opinion  of  the  Engineer,  the  work  is  not 
proceeding  in  accordance  with  this  contract. 

Such  estimates  shall  not  be  required  to  be  made  by  strict  measurement,  but 
they  may  be  made  by  measurement  or  by  estimation  or  partly  by  one  method  and 
partly  by  the  other,  and  it  shall  be  sufficient  if  they  are  approximate  only. 

Upon  each  such  estimate  being  made  and  certified  in  writing  to  the  Commission, 
the  Commission  shall  prepare  and  certify  a  voucher  for  ninety  per  centum  (90%) 
of  the  amount  stated  in  such  estimate. 

It  is  common  to  specify  either  85  per  cent  or  90  per  cent ;  87£  per  cent 
is  used  in  one  case. 

Another  reading  covering  monthly  estimates  is  this : 

C.  The  Engineer  shall  once  a  month  make  an  approximate  estimate  in  writing 
of  the  amount  of  work  done  and  of  the  relative  value  thereof,  according  to  the 
terms  of  this  contract,  and  he  may  make  allowance  in  said  monthly  estimates  on 
account  of  the  work  covered  thereby  being  more  or  less  difficult  than  the  average. 
And  it  is  agreed  that  said  estimates  may  be  withheld  or  diminished  when  the  work 
is  not  carried  on  in  accordance  with  the  provisions  of  this  contract. 

And  the  following  is  similar : 

D.  Estimates  may  at  any  time  be  withheld  or  reduced  if,  in  the  opinion  of  the 
Engineer,  the  work  is  not  proceeding  in  accordance  with  this  contract. 

The  provision  for  reducing  or  withholding  estimates  is  not  unusual. 
Nevertheless  it  seems  somewhat  drastic  and  illogical.  It  looks  like  a  club 
held  over  the  Contractor,  and  is,  in  essence,  a  penalty,  although,  as  a  regu- 
lation of  times  of  payment,  a  court  probably  would  not  so  regard  it.  The 
logical  remedy  for  failure  to  properly  carry  on  the  work  is  to  take  the 
work  away  as  provided  in  Section  33. 

In  one  of  the  readings  above  the  partial  payments  are  "  to  assist  the 
Contractor  to  prosecute  the  work  advantageously."  A  withholding  has 
a  contrary  effect. 

If  the  Contractor's  failure  to  carry  on  the  work  satisfactorily  is  due  in 
any  part  to  financial  weakness,  withholding  or  reducing  the  estimate  may 
bankrupt  him,  and  this  will  not  be  to  the  advantage  of  the  railroad  or  City. 
There  should  be  no  reduction  unless  to  cover  work  performed  unaccept- 
ably  or  to  protect  workmen.  A  provision  to  the  following  effect  may  be 
introduced  if  it  seems  desirable : 

E.  Work  not  performed  acceptably  may  be  excluded  in  whole  or  in  part  from 
monthly  estimates.    All  monthly  estimates  are  provisional  and  shall  not  be  con- 
strued as  an  acceptance  of  any  part  of  the  work. 


UNIFORM  CONTRACT  FORM  16-75 

Another  reading  of  the  latter  part  is : 

F.  The  payment  of  monthly  estimates  shall  not  in  any  respect  be  taken  as  an 
admission  that  the  work  is  done  or  that  its  quantity  or  quality  is  satisfactory,  nor 
as  a  release  of  the  Contractor  from  responsibility  in  respect  thereof,  but  the  whole 
work  and  all  particulars  relating  thereto  shall  be  subject  to  revision  and  adjustment 
by  the  City  at  the  tune  of  final  acceptance  and  the  payment  of  the  final  estimate. 

G.  Monthly  payments  shall  not  be  an  acceptance  of  the  work  done,  and  no  work 
shall  be  accepted  until  the  work  contracted  for  is  fully  completed,  or  as  provided 
otherwise  in  these  specifications. 

H .  But  if  at  any  time  after  such  monthly  payments  have  been  made  it  shall 
be  found  that  any  of  the  work  included  in  the  estimates  on  which  such  payments 
have  been  made  has  been  performed  in  an  unworkmanlike  manner  or  contrary  to 
these  specifications,  the  Engineer  shall  direct  the  Contractor  to  take  down  and  re- 
build such  work  in  the  manner  required  by  the  specifications,  and  no  further  pay- 
ment on  this  Contract  shah1  be  made  until  such  directions  have  been  in  all  re- 
spects complied  with. 

Section  35  is  unusual  in  Contracts,  but  shows  some  recognition  of  the 
rights  of  the  Contractor.  He  is  entitled  to  his  pay,  and  properly  to  the  pay 
for  85  per  cent  of  all  work  acceptably  performed.  A  reduction  for  any 
part  of  the  work  wholly  or  in  part  not  acceptable  is,  however,  proper. 

The  first  line  of  Section  35  should  read : 

/.  If  the  Company  shall  fail  to  make  payments  of  moneys  due  at  the  times 
provided  in  this  agreement,  unless  on  account  of  restraint  by  legal  process,  the 
Contractor  shall  have  the  right  to  suspend  work,  etc. 

The  moneys  should  be  "  due  "  and  they  will  not  be  due  until  the  esti- 
mates are  approved  by  the  Engineer.  The  Contractor  certainly  should 
not  have  the  right  to  withdraw  from  the  Contract  for  non-payment  of 
moneys  on  perhaps  the  tenth  of  every  month  unless  the  moneys  are  "  due," 
for  which  the  Chief  Engineer's  approval  is  necessary.  Withholding  the 
money  for  adequate  cause  should  not  give  the  right  to  withdraw  to  the 
Contractor.  Neither  should  a  failure  to  make  satisfactory  progress  pre- 
vent the  Contractor  from  receiving  any  payment  properly  due  and  from 
exercising  his  rights  as  to  withdrawal  in  consequence  of  a  failure  to  pay. 
A  fair  balance  of  rights  should  exist. 

Another  form  in  use  provides  for  payment  of  interest  in  case  of  any 
delay  in  payment : 

J.  Such  payment  of  interest,  if  any,  to  be  in  lieu  of  any  claim  by  the  Con- 
tractor for  alleged  damages  for  breach  of  contract  or  otherwise  in  case  of  delayed 
payments. 

This  provision  is  regarded  unfavorably  by  Contractors.  When  the 
Contractor  has  arranged  his  finances  in  the  expectation  of  receiving  his 


16-76  UNIFORM   CONTRACT  FORM 

monthly  estimate,  it  may  be  extremely  inconvenient  to  re-finance,  and  in 
cases  where  the  Contractor's  resources  are  not  extensive,  withholding  the 
monthly  estimate  may  prove  a  serious  matter.  The  Company  or  City 
should  obligate  itself  to  pay. 

Municipalities  should  also  appreciate  the  importance  of  making  pay- 
ments according  to  the  Contract  provisions.  In  one  case  a  Contractor  who 
had  a  losing  Contract  found  it  very  convenient  to  notify  the  City  that 
because  of  its  failure  to  make  payments  as  required,  the  Contract  was 
broken,  and  no  further  work  would  be  done  under  it.  Under  Section  35, 
however,  thirty  days  notice  to  the  City  would  be  necessary  before  with- 
drawal from  work  by  the  Contractor. 

K.  The  Board  may,  if  it  seems  expedient  so  to  do,  cause  estimates  to  be  made 
more  frequently  than  once  a  month,  and  it  may  cause  payments  to  be  made  more 
frequently  to  the  Contractor. 

The  same  Contract  also  provides  that  the  Board  may  at  its  option 
reserve  less  than  the  15  per  cent  specified. 

In  a  slightly  different  form  and  more  concisely,  it  has  been  provided : 

L.  At  the  option  of  the  Board,  estimates  may  be  made  more  frequently  and  a 
smaller  amount  may  be  retained  than  as  aforesaid. 

M .  The  City  shall  retain  15  per  cent  of  such  estimates  as  part  security  for  the 
fulfilment  of  this  contract  by  the  Contractor. 

In  one  case,  on  an  extensive  Contract,  the  clause  reads : 

N.  When  the  10  per  cent  thus  reserved  shall  have  amounted  to  $450,000, 
thereafter  the  City  shall  pay  the  total  amount  of  each  estimate. 

On  the  same  Contract  it  is  provided  that  no  monthly  estimate  shall 
be  rendered  unless  the  work  is  increased  in  amount  by  at  least  $25,000. 
Other  Contracts  of  a  different  sort  in  another  City  have  a  similar  provi- 
sion with  the  amount  $300. 

It  seems  desirable  that  monthly  estimates  should  be  proportionate  to 
the  value  of  the  work  done,  for  example : 

0.  And  said  Engineer  may  make  such  allowance  in  said  monthly  estimates  as 
he  may  deem  reasonable  on  account  of  the  work  having  been  more  or  less  difficult 
than  the  average  of  this"  contract. 

This  is  an  entirely  proper  provision,  and  might  be  added  to  Section  36. 
The  word  "  proportionate  "  in  that  section  probably  covers  the  point, 
but  Engineers  might  not  always  so  interpret  it. 

Occasionally  a  Contract  provides  for  weekly  payments. 

Provision  is  sometimes  made  for  a  schedule  of  partial  payments;  for 


UNIFORM   CONTRACT  FORM  16-77 

instance,  for  50  per  cent  of  unit  price  when  structural  material  is  delivered, 
and  for  other  specified  percentages  during  the  progress  of  work.  On  the 
other  hand,  a  clause  like  the  following  is  sometimes  used : 

P.  In  making  such  estimates,  the  Engineer  shall  not  take  into  consideration 
any  materials  on  hand  which  have  not  been  placed  in  the  improvement. 

For  some  Contracts  this  is,  probably,  a  reasonable  provision.  In  others 
the  assembling  of  materials  constitutes  a  very  important  part  of:  the  Con- 
tract, and  a  special  clause  should  be  added  covering  payments  on  deliv- 
eries of  material.  For  most  Contracts  it  would  be  proper  to  make  an 
allowance  for  material  on  hand  and  on  the  work. 

37.  ACCEPTANCE.    The  work  shall  be  inspected  for  acceptance  by  the 
Company  promptly  upon  receipt  of  notice  in  writing  that  the  work  is  ready 
for  such  inspection. 

38.  FINAL    ESTIMATES.     Upon  the  completion  and  acceptance  of  the 
work  the  Chief  Engineer  shall  execute  a  certificate  over  his  signature  that 
the  whole  work  provided  for  in  this  agreement  has  been  completed  and  ac- 
cepted by  him  under  the  terms  and  conditions  thereof,  whereupon  the  entire 
balance  found  to  be  due  to  the  Contractor,  including  said  retained  percentage, 
shall  be  paid  to  the  Contractor  at  the  office  of  the  Treasurer  of  the  Company 

within days  after  the  date  of  said  final  certificate.     Before  the  time  of 

payment  of  said  final  estimate  the  Contractor  shall  submit  evidence  satisfac- 
tory to  the  Chief  Engineer   that  all  payrolls,  material   bills  and  outstanding 
indebtedness  in  connection  with  this  work  have  been  paid. 

Section  37  is  not  to  be  found  in  most  Contracts.  One  form  has  an 
equivalent  as  follows : 

A.  A  final  inspection  shall  be  made  of  the  work  when  the  Contractor  notifies 
the  Commission  in  writing  that  it  has  been  completed.     If  the  work  is  found  to  be 
complete  in  accordance  with  these  specifications  it  shall  finally  be  accepted  by  the 
City. 

Most  Contracts  fail  to  provide  for  acceptance  when  notified  by  the 
Contractor  of  his  readiness  for  inspection.  The  provision  seems  desirable 
as  a  recognition  of  the  right  of  the  Contractor  in  this  particular. 

Another  reading  for  Section  38  is  shown  below : 

B.  The  Chief  Engineer  shall,  as  soon  as  practicable  after  the  completion  of 
this  contract,  make  a  final  estimate  of  the  amount  of  work  done  thereunder  and  the 

value  of  such  work,  and  the  City  shall  within days  after  such  estimate  is 

so  made  and  is  approved  by  the  Board,  pay  the  entire  sum  so  found  to  be  due 
hereunder,  after  deducting  therefrom  all  previous  payments  and  all  amounts  to  be 
kept  and  all  amounts  to  be  retained  under  the  provisions  of  this  contract.     All  prior 
partial  estimates  shall  be  subject  to  correction  in  the  final  estimate  and  payment. 


16—78  UNIFORM   CONTRACT  FORM 

C.  Whenever,  in  the  opinion  of  the  Chief  Engineer,  the  Contractor  shall  have 
completely  performed  this  contract  on  his  part,  the  Chief  Engineer  shall  so  certify, 
in  writing  to  the  Board,  and  his  certificate  shall  state,  from  actual  measurements, 
the  whole  amount  of  work  done  by  the  Contractor,  and  also  the  value  of  such  work 
under  and  according  to  the  terms  of  the  contract. 

All  prior  certificates  upon  which  partial  payments  may  have  been  made,  being 
merely  estimates,  shall  be  subject  to  correction  in  the  final  certificate,  which  final 
certificate  may  be  made  without  notice  thereof  to  the  Contractor,  or  of  the  meas- 
urements upon  which  it  is  based. 

D.  Whenever  (etc.,  then)  the  Engineer  shall  proceed  with  all  reasonable  dili- 
gence to  inspect  and  measure  the  work  and  shall  make  out  the  final  estimate  for  the 
same  and  shall  certify  etc.,  .  .  .  provided  that  nothing  herein  contained  shall  be 
construed  to  affect  the  right  of  the  Board,  hereby  reserved,  to  reject  the  whole  or 
any  portion  of  the  aforesaid  work  should  the  certificate  be  found,  or  known  to  be 
inconsistent  with  the  terms  of  this  agreement  or  improperly  given. 

Another  reading  of  the  final  clause  is  this : 

E.  Before  the  final  payment  is  made,  the  Contractor  shall  show  to  the  City 
satisfactory  evidence  that  all  just  liens,  claims  and  demands  of  his  employees,  or  of 
parties  from  whom  materials  used  in  the  construction  of  the  work  may  have  been 
purchased  or  procured,  are  fully  satisfied,  and  that  the  materials  furnished  and  the 
work  done  are  fully  released  from  all  such  liens,  claims  and  demands. 

The  City  probably  is  protected  in  this  regard  by  the  Bond,  but  the 
provision  above  is  reasonable  and  appropriate. 

Section  17  also  provides  as  to  liens,  but  does  not  require  evidence  from 
the  Contractor  as  Section  38  does. 

Another  Contract  form  provides  for  the  payment  of  the  final  estimate 
as  follows : 

F.  Excepting  such  sum  or  sums  as  may  lawfully  be  retained  by  said  City. 

This  seems  desirable  in  view  of  Section  17,  which  relates  to  liens  and 
claims,  and  it  could  properly  be  introduced,  after  the  words  "  final  certifi- 
cate," in  line  7  of  Section  38. 

There  should  be  added  to  Section  38,  after  "  conditions  thereof,"  in 
the  fourth  line,  the  words : 

G.  and  shall  make  and  approve  the  final  estimate  of  the  work. 
Line  7  should  read : 

H.  Before  the  approval  of  the  final  estimate, 
instead  of 

Before  the  time  of  payment  of  said  final  estimate. 


UNIFORM  CONTRACT  FORM  16-79 

This  agreement  shall  inure  to  the  benefit  of  and  be  binding  upon  the  legal 
representatives  and  successors  of  the  parties  respectively. 

In  Witness  Whereof)  the  parties  hereto  have  executed  this  agree- 
ment in the  day  and  year  first  above 

written. 

WITNESS  : 


This  conclusion  of  the  Contract  is  somewhat  different  in  form  from 
that  used  in  other  Contracts,  but  it  seems  complete  and  effective. 

In  the  case  of  one  public  Board,  nothing  is  said  about  successors  of  the 
Board,  but  this  provision  is  made : 

A.  This  agreement  shall  be  binding  upon  the  heirs  and  legal  representatives 
of  the  said  Contractor. 

As  the  Contractor  may  be  a  corporation  without  heirs,  the  Uniform  Con- 
tract Form  reading,  "  legal  representatives  and  successors,"  seems  more 
appropriate. 

The  reference  to  successors  is  often  placed  at  the  beginning  of  the  con- 
tract in  this  clause : 

B.  Witnesseth,  That  the  parties  to  these  presents,  each  in  consideration 
of  the  covenants  and  agreements  on  the  part  of  the  other,  herein  contained,  do 
hereby  covenant  and  agree,  the  party  of  the  first  part  for  itself,  and  the  party  of  the 

second  part  for  and  

heirs,  executors  and  administrators,  successors  and  assigns,  as  follows : 

The  following  concluding  clause  sufficiently  explains  itself : 

C.  In  Witness  Whereof,  this  contract  has  been  executed  for  The  City  of 
New  York  by  the  Public  Service  Commission  for  the  First  District  under 
and  by  virtue  of  a  resolution  duly  adopted  by  the  Commission  and  the  seal  of  the 
Commission  has  been  hereto  affixed  and  attested  by  its  Secretary  and  these 
presents  have  been  signed  by  its  Chairman ;  and  the  Contractor  *  has  (hereunto 

set hand  .  .  .  and  seal  ...)•••  (caused  .  .  .  corporate  seal  to  be 

hereto  affixed  and  these  presents  to  be  executed  by  proper  officers)  the  day  and 
year  first  above  written. 

THE  CITY  OF  NEW  YORK 
By  the 

PUBLIC  SERVICE  COMMISSION  FOR  THE  FIRST  DISTRICT 

By 

Chairman 
Attest 

Secretary 

*  If  the  Contractor  be  an  individual,  use  the  words  inclosed  in  the  first 
bracket ;  if  a  corporation,  use  the  words  inclosed  in  the  second  bracket. 


16—80  UNIFORM   CONTRACT  FORM 

Sometimes  the  concluding  clause  refers  to  duplicate  or  other  additional 
Contracts.  The  following  forms  are  examples : 

D.  In  Witness  Whereof,  the  Sewerage  Commission  of 

has  hereunto  set  its  hand  and  seal  and  the  Contractor  has  also  set  his  or  their 
hands  and  seals;  and  the  Commission  and  the  Contractor  have  executed  this 
agreement  in  duplicate,  one  part  to  remain  with  the  Commission  and  the  other  to 

be  delivered  to  the  Contractor,  the day  of in 

the  year  one  thousand  nine  hundred  and 

E.  In  Witness  Whereof,  the  said  parties  of  the  first  part  have  hereunto,  and  to 
three  other  original  agreements  of  like  tenor  and  date,  set  their  Corporate  Seal,  and 
have  caused  the  same  to  be  signed  by  a  majority  of  the  said  Commissioners,  and  the 
party  of  the  second  part  have  hereunto,  and  the  three  other  original  agreements  of 
like  tenor  and  date,  set  their  hands  and  seals,  the  day  and  year  first  above  written. 

The  third  copy  is  commonly  deposited  with  the  Auditor;  a  fourth  is 
unusual.     All  being  originals,  either  one  is  competent  evidence. 
A  rather  unusual  clause  is  this  : 

F.  In  Witness  Whereof,  the  said  parties  have  hereunto  set  their  hands  and 
seals,  the  Commonwealth  executing  these  presents  by  its  said  Board  (naming  them) 
who  incur  no  personal  liability  by  reason  of  the  execution  hereof  or  anything  herein 
contained,  on  this day  of A.D.  191 . . 

Specifying  exemption  from  liability  is  probably  unnecessary. 

The  following  includes  certificates  of  City  Officers,  to  be  signed  before 
the  Director  signs  the  Contract  on  behalf  of  the  City.  These  formalities 
may  be  required  by  law,  or  may  be  only  a  requirement  by  the  Director. 

G.  In  Witness  Whereof,  the  parties  to  this  agreement  have  hereunto  set 
their  hands  and  seals. 

Dated  the  day  and  year  first  herein  written. 


THE  CITY  OF 
By.. 


Director  of  Public  Service. 

Attest 

Secretary  Department  of  Public  Service. 
Party  of  the  First  Part. 

Contractor     

Party  of  the  Second  Part. 

Approved  as  to  form City  Attorney. 

Certified  as  to  funds Director  of  Finance. 

Approved  by City  Manager. 

Fund..  


CHAPTER  XVII 
ADDITIONAL  CONTRACT  FORMS 

In  addition  to  the  clauses  found  in  the  Uniform  Contract  Form,  treated 
at  length  in  the  preceding  chapter,  there  are  others,  some  important  and 
others  interesting  and  suggestive,  which  Engineers  may  desire  to  use. 
For  convenience  of  reference  these  additional  clauses  will  be  arranged  in 
classes  with  section  numbers  and  letters  beginning  with  Section  50. 

50.  The  Contractor  shall  keep  himself  fully  informed  of  all  existing  or  future 
State  and  federal  laws,  and  of  all  municipal  ordinances,  prohibitions,  rules  and 
regulations  in  any  manner  affecting  the  conduct  of  the  work,  and  of  all  orders  or 
decrees  of  any  body  or  tribunal  having  any  jurisdiction  or  authority  over  the  ma- 
terials, times,  places  and  actions  of  those  employed  in  the  work  embraced  in  this 
contract.  If  any  discrepancy  or  inconsistency  is  discovered  in  the  plans,  drawings 
or  specifications  or  contract  for  this  work  in  relation  to  any  such  act,  ordinance, 
prohibition,  rule,  regulation,  order  or  decree,  he  shall  forthwith  report  the  same 
to  the  Engineer  in  writing.  The  Contractor  shall  at  all  times  observe  and  comply 
with,  and  shall  cause  all  his  agents  and  employees  to  comply  with  all  said  existing 
and  future  acts,  ordinances,  prohibitions,  rules,  regulations,  orders,  and  decrees; 
and  shall  protect  and  indemnify  the  City,  the  Commission,  the  Engineer,  and  their 
employees  against  any  and  all  claims  arising  from  or  based  on  any  violation  of 
such  acts,  ordinances,  prohibitions,  rules,  regulations,  orders  or  decrees,  and  against 
all  violations  of  law  by  the  Contractor  or  his  agents  or  employees.  He  shall  also 
procure  and  pay  for  all  licenses  or  permits  required  in  the  prosecution  of  any  part  of 
the  work  embraced  in  this  contract. 

It  is  doubtful  whether  this  clause  is  in  any  way  essential,  although  it  is 
not  uncommon.  The  Contractor,  irrespective  of  this,  is  required  to  know 
the  law  and  to  observe  it.  The  provision  in  Section  15  that  the  Contractor 
shall  indemnify  the  railroad  or  the  City  seems  sufficient.  Nevertheless  this 
clause  does  call  special  attention  to  this  particular  matter. 

Another  reading  is : 

A.  In  all  the  operations  connected  with  the  work  herein  specified,  all  city  or 
town  ordinances,  and  all  laws  controlling  or  limiting  in  any  way  the  actions  of  those 
engaged  on  the  works,  or  affecting  the  materials  applied  to  them,  must  be  respected 
and  strictly  complied  with ;  and  no  work,  except  in  case  of  necessity,  of  which  the 
Engineer  shall  be  the  judge,  shall  be  carried  out  on  Sunday. 

17-1 


17-2  ADDITIONAL  CONTRACT  FORMS 

The  reference  to  Sunday  is  rather  unusual.  Requiring  the  judgment 
of  the  Engineer  as  to  necessity  has  some  value,  but  it  should  be  understood 
that  the  judgment  of  the  Engineer  may  not  be  sustained  by  the  court  if  an 
arrest  be  made  or  an  injunction  asked  for,  although  the  Contractor  is 
bound  by  it.  The  Engineer  has  no  power  to  override  the  law. 

Other  readings  are  these : 

B.  In  all  operations  connected  with  the  Work,  all  ordinances  of  the  City,  and 
of  the  Board  of  Health,  so  far  as  they  may  be  valid  and  operative  with  respect 
thereto,  and  all  laws  of  this  State  which  are  now  applicable  to  and  control  or  limit 
in  any  way  the  actions  of  those  engaged  in  the  work  or  affecting  the  materials 
belonging  to  them,  shall  be  respected  and  strictly  complied  with,  and  the  Contractor 
shall  further  strictly  comply  with  all  applicable  Federal,  State  and  Municipal 
regulations  regarding  the  transportation  in  and  around  the  City  and  Harbor,  of 
materials  used  in,  or  in  connection  with  the  work. 

C.  The  said  Contractor  hereby  agrees  to  carry  on  all  the  work  provided  for  in 
this  contract  in  strict  conformity  with  the  requirements  of  the  law  under  which  The 
Sanitary  District  of  Chicago  is  organized,  entitled,  "An  Act  to  create  Sanitary 
Districts  and  to  Remove  Obstructions  from  the  Desplaines  and  Illinois  Rivers," 
approved  May  29,  1889,  in  force  July  1,  1889,  and  all  amendments  thereto. 

Some  States  have  statute  requirements  that  certain  clauses  relating  to 
labor  shall  be  included  in  all  State,  and  in  certain  municipal  Contracts, 
under  a  penalty  for  not  writing  them  into  the  Contract.  The  Commis- 
sioner, or  the  City  Engineer,  or  Chief  Engineer  must  know  these  laws. 

The  following  provision  results  in  whole  or  in  part  from  the  require- 
ments of  the  statutes  in  Massachusetts : 

51.  In  the  employment  of  mechanics  and  laborers  on  the  work  to  be  done 
under  this  contract  preference  shall  be  given  to  citizens  of  the  Commonwealth, 
and,  if  they  cannot  be  had  in  sufficient  numbers,  then  to  citizens  of  the  United 
States  (Chapter  311  of  the  Acts  of  1904).  No  employee  shall  be  required  to  lodge, 
board  or  trade  at  a  particular  place  or  with  a  particular  person.  (Revised  Laws, 
chapter  106,  section  13.)  No  laborer,  workman  or  mechanic  in  the  employ  of  the 
Contractor,  sub-contractor  or  other  person  doing  or  contracting  to  do  the  whole 
or  any  part  of  the  work  contemplated  or  included  in  this  contract  shall  be  required 
to  work  more  than  eight  hours  hi  any  one  calendarday.  (Chapter  517  of  the  Acts 
of  1906.) 

A.  Local  Labor :  Local  labor  shall  be  employed  upon  this  work  in  so  far  as 
may  be  possible,  and  shall  be  given  preference  over  all  other  labor. 

B.  Said  Contractors  further  covenant  and  agree  that  no  laborer,  workman  or 
mechanic  working  within  this  Commonwealth  in  the  employ  of  said  Contractor,  a 
sub-contractor,  or  other  person,  doing  or  contracting  to  do  the  whole  or  a  part  of 
the  work  contemplated  by  this  contract  shall  be  requested  or  required  to  work  more 
than  eight  hours  in  any  one  calendar  day. 


ADDITIONAL  CONTRACT  FORMS  17-3 

A  similar  provision  from  another  State  reads : 

C.  The  Contractor  agrees  to  comply  with  the  provisions  of  the  Labor  Law, 
including  Section  Three  thereof  as  re-enacted  by  Chapter  36  of  the  Laws  of  1909, 
The  Contractor  further  agrees  and  stipulates  that  no  laborer,  workman  or  mechanic 
in  the  employ  of  the  Contractor,  sub-contractor  or  other  person  doing  or  contracting 
to  do  the  whole  or  a  part  of  the  work  contemplated  by  this  contract,  shall  be  per- 
mitted or  required  to  work  more  than  eight  hours  hi  any  one  calendar  day,  except 
in  cases  of  extraordinary  emergency  caused  by  fire,  flood  or  danger  to  life  or  prop- 
erty ;  and  further  that  the  wages  to  be  paid  for  a  legal  day's  work  as  hereinbefore 
defined  to  all  classes  of  such  laborers,  workmen  or  mechanics  upon  the  work  con- 
templated by  this  contract  or  upon  any  material  to  be  used  upon  or  in  connection 
therewith,  shall  not  be  less  than  the  prevailing  rate  for  a  day's  work  in  the  same  trade 
or  occupation  in  the  Borough  of  the  City  where  the  work  hereby  contemplated, 
about  or  in  connection  with  which  such  labor  is  performed,  is  in  its  final  or  completed 
form  to  be  situated,  erected  or  used ;  and  that  each  such  laborer,  workman  or  me- 
chanic employed  by  the  Contractor  or  by  any  sub-contractor  or  other  person  on, 
about  or  upon  the  work  contemplated  by  this  contract,  shall  receive  such  wages 
herein  provided  for.    This  contract  shall  be  void  and  of  no  effect,  unless  the  Con- 
tractor shall  comply*  with  the  provisions  of  this  section.     In  obedience  to  the 
requirements  of  Section  Fourteen  of  the  Labor  Law  it  is  further  provided  that  if 
the  provisions  of  the  said  Section  Fourteen  are  not  complied  with,  this  contract 
shall  be  void. 

Apparently  there  is  no  penalty  on  the  Contractor  except  that  the  Con- 
tract becomes  void.  Will  the  courts  construe  this  literally,  and  simply 
declare  the  Contract  void  in  case  of  a  losing  Contract,  where  the  Con- 
tractor purposely  violates  this  Contract  provision?  Any  citizen  would 
probably  have  a  right  to  bring  the  action  to  have  the  Contract  declared 
void,  and  the  citizen  might  be  a  good  friend  of  the  Contractor.  The 
provision  should  be,  in  form,  that  a  failure  to  observe  these  requirements 
should  constitute  a  breach  of  Contract. 

D.  Said  Contractor  or  his  agents  or  employees  shall  not,  directly  or  indirectly, 
make  it  the  condition  of  the  employment  of  any  person  that  he  shall  lodge,  board  or 
trade  at  any  particular  place  or  with  any  particular  person ;  but  every  employee  on 
the  work  to  be  done  under  this  contract  shall  have  full  liberty  to  lodge,  board  and 
trade  wheresoever  and  with  whomsoever  he  may  choose. 

E.  The  Contractor  shall  punctually  pay  his  employees  who  shall  be  engaged 
on  the  work  covered  by  this  contract,  in  cash  and  not  in  scrip,  commonly  known  as 
store  money  orders,  and  he  shall  not  directly  or  indirectly  conduct  or  carry  on  what 
is  commonly  known  as  a  company  store  if  there  shall  at  the  tune  be  any  store  selling 
supplies  within  two  miles  of  the  place  where  this  contract  is  being  executed. 

52.  It  is  the  intent  and  understanding  of  the  parties  to  this  contract  that  each 
and  every  provision  of  law  required  to  be  inserted  in  this  contract  should  be  and  is 
inserted  herein.  Furthermore,  it  is  hereby  stipulated  that  every  such  provision 
is  to  be  deemed  to  be  inserted  herein ;  and  if,  through  mistake  or  otherwise,  any 


17-4  ADDITIONAL  CONTRACT  FORMS 

such  provision  is  not  inserted  or  is  not  inserted  in  correct  form,  then  the  contract 
shall  forthwith,  upon  the  application  of  either  party,  be  amended  by  such  insertion 
so  as  to  comply  strictly  with  the  law,  and  without  prejudice  to  the  rights  of  either 
party  hereunder. 

A.  If  this  contract  contains  any  unlawful  provision  not  an  essential  part  of  the 
general  structure  of  the  contract  and  which  shall  not  appear  to  have  been  a  con- 
trolling or  very  material  inducement  to  the  making  thereof,  the  same  shall  be  deemed 
of  no  effect,  and  shall  upon  the  application  of  either  party,  be  stricken  from  the 
contract  without  affecting  the  binding  force  of  the  contract  as  it  shall  remain  after 
omitting  such  provision. 

The  last  provision  is  quite  unusual,  but  is  abundantly  safe.  Probably 
unlawful  provisions  are  seldom  included  in  Contracts  of  this  sort. 

Along  the  lines  of  Workmen's  Compensation  Acts,  insurance  against 
accidents  to  employees  becomes  important  and  in  some  States  appears  to 
be  compulsory.  The  following  provisions  are  in  point : 

53.  The  Contractor  further  agrees  to  insure  to  his  employes  or  their  beneficia- 
ries the  necessary  first  aid,  medical,  surgical  and  hospital  services,  and  the  compensa- 
tion provided  for  in  the  Act  of  the  General  Assembly  of  the  State  of  Illinois,  entitled 
"An  Act  to  promote  the  general  welfare  of  the  people  of  this  state  by  providing 
compensation  for  accidental  injuries  or  death  suffered  hi  the  course  of  employment 
within  this  state ;  providing  for  the  enforcement  and  administering  thereof,  and  a 
penalty  for  its  violation,  and  repealing  an  Act  entitled  'An  Act  to  promote  the  gen- 
eral welfare  of  the  people  of  this  state  by  providing  compensation  for  accidental 
injuries  or  death  suffered  in  the  course  of  employment/  approved  June  10,  1911, 
in  force  May  1,  1912,"  approved  June  28,  1913,  in  force  July  1,  1913,  as  amended 
by  an  Act  of  the  General  Assembly  of  the  State  of  Illinois,  in  force  July  1,  1915, 
and  further  agrees  to  indemnify,  keep  and  save  harmless  said  Sanitary  District 
from  all  claims,  judgments,  awards  and  costs  which  may  in  any  wise  come  against 
said  Sanitary  District  by  reason  of  any  accidental  injuries  or  deaths  suffered  by  any 
of  his  employes  in  and  about  the  performance  of  this  contract. 

A.  The  Contractor  agrees  to  take  out  and  maintain,  at  his  own  expense,  insur- 
ance against  damages  arising  from  injury  to  his  employees  in  accordance  with 
Chapter  751  of  the  Acts  of  1911  and  any  amendments  thereof  and  to  comply  with 
all  the  requirements  thereof. 

B.  The  Contractor  agrees  to  take  out  and  maintain,  at  his  own  expense,  insur- 
ance against  accidents,  in  companies  in  good  standing  in  Massachusetts,  for  a  sum 
satisfactory  to  the  Commission,  to  be  held  and  applied,  in  case  of  loss,  in  payment 
or  satisfaction  of  all  claims  and  suits  for  or  on  account  of  any  injuries  or  damage  to 
person  or  property  received  or  sustained  by  any  person  or  persons  upon  or  in  con- 
sequence of  or  in  connection  with  the  work  embraced  in  this  contract,  and  to  furnish 
satisfactory  evidence  to  the  Commission,  whenever  requested,  that  the  said  amount 
of  accident  insurance  is  in  force. 

Among  laws  to  be  observed  are  patent  laws,  and  the  following  clause  is 
sometimes  introduced,  although  Section  15  of  the  preceding  chapter  seems 
to  make  this  quite  unnecessary  : 


ADDITIONAL   CONTRACT   FORMS  1.7-5 

54.  The  Contractor  shall  hold  himself  responsible  for  any  claims  made  against 
the  City  for  any  infringement  of  patents  by  the  use  of  patented  articles  in  the  con- 
struction and  completion  of  the  work,  or  any  process  connected  with  the  work 
agreed  to  be  performed  under  this  contract  or  of  any  materials  used  upon  the  said 
work,  and  shall  indemnify  and  save  harmless  the  City  for  all  costs,  expenses  and 
damages  which  the  City  shall  be  obliged  to  pay  by  reason  of  any  infringement  of 
patents  used  in  the  construction  and  completion  of  the  work. 

If  a  specific  article  is  required  by  the  City,  and  the  claim  or  suit  is 
due  to  such  requirement,  the  Contractor  ought  not  to  be  held  liable  for 
infringement  of  patents.  He  should  have  competent  legal  advice  before 
signing  a  Contract  with  this  clause  included,  if  he  has  reason  to  believe 
infringement  of  patents  is  involved. 

Somewhat  along  the  lines  of  precaution  and  safety  are  provisions  for 
sanitary  conveniences.  The  Uniform  Contract  Form  for  railroad  construc- 
tion may  not  need  such  provisions.  In  settled  communities  something  of 
the  sort  appears  necessary.  The  following  clauses  have  been  in  use : 

55.  Suitable  and  satisfactory  buildings  shall  be  provided  by  the  Contractor 
for  the  housing,  feeding  and  sanitary  necessities  of  the  men,  and  suitable  stabling 
for  the  animals  employed  upon   the   work.    Such  buildings  shall  be  located  at 
approved  places. 

'  .A.  The  Contractor  shall  provide  at  places  approved  by  the  Engineer  suitable 
and  sufficient  sanitary  conveniences  for  the  use  of  all  workmen  employed  upon  this 
work  and  they  shall  be  exclusively  used  by  all  workmen.  Should  polluting  material 
be  deposited  in  any  part  of  the  work,  the  Contractor  shall  at  once  clean  up  the 
material  to  the  satisfaction  of  the  Engineer.  Any  workman  making  such  pollution 
shall  be  forthwith  discharged  and  not  again  employed  upon  the  work. 

B.  Necessary  sanitary  conveniences  for  the  use  of  laborers  on  the  work, 
properly  secluded  from  public  observation,  shall  be  constructed  and  maintained  by 
the  Contractor  in  such  manner  and  at  such  points  as  shall  be  approved,  and  their 
use  shall  be  strictly  enforced. 

The  following  clauses  relate  to  the  arrangement  and  progress  of  the 
work,  and  some  of  the  features  are  not  included  in  the  Uniform  Contract 
Form: 

56.  Before  beginning  work  the  Contractor  shall  prepare  a  program  of  construc- 
tion which  shall  be  made  satisfactory  to  the  City.     It  shall  show  the  order  and  time 
at  which  the  various  parts  of  the  work  are  to  be  done,  the  progress  of  the  work 
month  by  month,  and  the  methods  of  construction  to  be  employed.    The  program 
may  be  modified  only  with  the  approval  of  the  City,  and  carrying  out  the  work  in 
accordance  with  it  shall  be  considered  an  obligation  of  the  contract. 

A.  Before  beginning  any  portion  of  the  work  the  Contractor  shall  state  what 
method  he  is  to  employ  and  the  order  of  his  operations  and  shall  give  the  Engineer 
due  notice  and  ample  time  for  making  the  necessary  detail  plans  for  that  portion. 


17-6  ADDITIONAL  CONTRACT  FORMS 

The  plans  are  intended  to  give  approximately  the  line,  grade  and  shape  of  the 
structure,  typical  details,  etc.,  but  the  exact  determination  of  all  these  is  to  be  made 
from  time  to  time  by  the  Engineer. 

B.  The  order  or  sequence  of  execution  of  the  work,  the  amount  of  trench  to  be 
open  at  any  time,  etc.,  and  the  general  conduct  of  the  work  shall  be  subject  to  the 
approval  and  direction  of  the  Engineer,  which  approval  or  direction  shall,  however, 
in  no  wise  affect  in  the  conduct  of  the  work  the  responsibility  of  the  Contractor. 

C.  The  Contractor  shall  assume  and  have  sole  charge  and  possession  of  all  the 
work  included  in  this  contract  until  the  termination  thereof,  except  as  provided 
for  in  clause  (e) ;   and  shall  be  solely  responsible  for  the  safe,  proper  and  lawful 
conduct  of  the  same.     He  shall  commence  the  work  and  carry  it  on  at  such  points 
and  in  such  order  of  precedence,  and  in  such  tunes  and  seasons,  as  he  may  from  time 
to  time  be  directed  by  the  Engineer.    He  shall  furnish  and  put  in  place,  free  of 
charge,  all  grade  planks  and  batter  boards,  and  all  large  stakes  and  temporary 
structures  necessary  for  making  and  maintaining  points  and  lines  given  by  the 
Engineer.    He  shall  furnish  all  transportation,  scaffolding,  forms,  apparatus,  ways, 
works,  machinery  and  plant  requisite  for  the  execution  of  this  contract ;  and  shall 
be  solely  answerable  for  the  safe,  proper  and  lawful  construction,  maintenance 
and  use  of  the  same. 

From  the  Contractor's  side  there  is  objection  to  the  provision  for 
"  furnishing  and  putting  in  place,  free  of  charge,  all  grade  planks  and  batter 
boards."  It  is  an  indefinite  quantity  for  him  to  bid  upon.  It  would 
properly  be  paid  for  as  extra  work. 

D.  Generally  the  Contractor  will  be  permitted  to  conduct  his  work  in  the  most 
expeditious  manner  possible,  having  due  regard  for  the  safety  of  persons  and  prop- 
erty and  facilities  for  traffic  and  under  such  instructions  as  the  Engineer  may  give 
from  tune  to  time. 

E.  The  Contractor  shall  take  all  responsibility  of  the  work,  and  take  all  pre- 
cautions for  preventing  injuries  to  persons  or  property  in  or  about  the  work ;  shall 
bear  all  losses  resulting  to  him  on  account  of  the  amount  or  character  of  the  work, 
or  because  the  nature  of  the  land  in  or  on  which  the  work  is  done  is  different  from 
what  was  estimated  or  expected,  or  on  account  of  the  weather,  tides,  elements,  or 
other  cause. 

F.  If  at  any  time  before  the  commencement,  or  during  the  progress  of  the  work, 
the  methods  and  appliances  used  or  to  be  used  appear  to  the  Engineer  to  be  in- 
efficient or  inappropriate  for  securing  the  quality  of  work  required  or  the  said  rate 
of  progress,  he  may  order  the  Contractor  to  increase  their  efficiency  or  to  improve 
their  character,  and  the  Contractor  shall  conform  to  such  order ;  but  the  failure  of 
the  Engineer  to  demand  an  increase  of  such  efficiency  or  improvement  in  character 
shall  not  relieve  the  Contractor  from  his  obligation  to  secure  the  quality  of  work 
and  the  rate  of  progress  established  in  the  specifications. 

The  above  clause  applies  in  part  to  the  provisions  of  Section  33  (a),  but 
is  in  part  different. 


ADDITIONAL  CONTRACT  FORMS  17-7 

The  following  clauses  may  properly  be  shown  here : 

57.  The  rates  of  progress  herein  required  have  been  purposely  made  low  enough 
to  allow  for  the  ordinary  delays  incident  to  construction  work  of  this  character,  and 
liberal  times  have  been  estimated  for  special  delays  at  certain  points.  No  extension 
of  time  will  be  made  for  ordinary  delays  and  accidents  incident  to  construction 
work  of  this  character,  and  the  occurrence  of  such  will  not  relieve  the  Contractor 
from  the  necessity  of  maintaining  these  rates  of  progress. 

In  case  of  an  extension  by  the  Board,  of  the  tune  for  the  completion  of  this 
Contract,  a  revised  schedule  of  progress  will  be  made  in  accordance  with  such  exten- 
sion of  tune. 

The  question  has  been  raised  whether  the  consent  of  the  surety  is  neces- 
sary in  case  of  an  extension  of  time.  The  basis  of  the  premium  paid  on 
Bonds,  as  has  been  stated,  is  now  the  amount  of  the  Contract,  and  in 
general  there  is  no  tune  limit.  The  Uniform  Contract  Form  provides  that 
the  Contractor  shall  indemnify  and  save  harmless  the  Company  against 
all  claims,  etc.  Under  this  clause,  a  year  or  two  after  the  Contract  was 
physically  completed  a  claim  might  be  made  for  personal  injuries  sustained 
during  the  conduct  of  the  Contract,  and  in  consequence  of  it.  The  Con- 
tractor would  be  under  obligation  to  indemnify  the  Company  and  the 
surety  would  also  be  liable  on  his  Bond  if  the  Contractor  failed  to  in- 
demnify. In  a  similar  way,  if  there  is  no  time  limit  on  the  Bond,  the  surety 
will  be  held  for  any  provision  of  the  Contract,  such  as  for  any  ordinary 
delay  or  extension  of  time,  as  a  matter  of  course.  For  any  extraordinary 
extension  of  time,  the  surety  will  doubtless  be  held  if  such  extension  is 
authorized  by  the  Contract.  It  may  be  advisable  to  notify  the  surety  of 
any  extraordinary  extension  of  time.  If  such  extension  is  due  to  addi- 
tional work,  and  there  is  any  question  as  to  whether  this  additional  work 
comes  within  the  Contract  as  "extra  work/7  the  consent  of  the  surety 
should  be  secured. 

A.  The  Contractor  hereby  assumes  the  risk  of  the  occurrence  of  delays  in  the 
prosecution  and  completion  of  the  work  embraced  in  this  contract ;  and  the  amounts 
hereinbefore  mentioned  to  be  received  by  the  Contractor  in  payment  for  the  work 
include  and  cover  that  risk,  and  therefore  the  Contractor  shall  be  entitled  to  no 
additional  compensation  on  account  of  any  such  delays. 

Although  it  is  common  to  provide  in  the  Instructions  to  Bidders,  or 
in  the  Proposal,  or  in  both,  that  the  quantities  specified  are  approximate, 
it  seems  desirable  that  the  Contract  should  contain  such  a  provision  and 
thus  be  complete  in  itself.  A  suitable  place  for  such  a  provision  is  im- 
mediately following  the  schedule  of  prices,  but  it  may  be  put  in  any  con- 
venient part  of  the  Contract. 


17—8  ADDITIONAL   CONTRACT  FORMS 

There  are  various  readings : 

58.  It  is  further  agreed  that  the  quantities  of  work  to  be  done  and  the  materials 
to  be  furnished,  as  given  hi  the  accompanying  Information  to  Bidders,  are  for  the 
purpose  of  comparing,  on  a  uniform  basis,  the  bids  offered  for  the  work  under  the 
Contract. 

A.  These  quantities  are  approximate  only,  being  given  as  a  basis  for  the 
uniform  comparison  of  bids,  and  the  City  does  not,  expressly  or  by  implication, 
agree  that  the  actual  amount  of  work  will  correspond  therewith.    An  increase  or 
decrease  in  these  quantities  shall  not  be  regarded  as  sufficient  ground  for  an  increase 
or  decrease  in  prices,  nor  in  the  time  allowed  for  the  completion  of  the  work  except 
as  specifically  provided  hereinafter. 

A  more  elaborate  provision  is  shown  below : 

B.  It  is  expressly  understood  and  agreed  that  the  quantities  of  the  various 
classes  of  work  to  be  done  and  materials  to  be  furnished  under  this  contract,  specified 
in  the  Contractor's  Proposal,  are  approximate  and  only  for  the  purpose  of  compar- 
ing, on  a  uniform  basis,  the  bids  offered  for  the  Work  under  this  contract ;   and 
neither  the  City,  nor  the  Commission,  nor  any  member  of  the  Commission,  is  to  be 
held  responsible  that  any  of  the  said  estimated  quantities  shall,  by  reason  of  in- 
accuracies, or  changes  in  the  Work,  be  found  even  approximately  correct  in  the 
construction  of  the  Work ;  and  the  Contractor  shall  make  no  claim  for  damage  or 
anticipated  profit,  or  for  loss  of  profit,  because  of  a  difference  between  the  quantities 
of  the  various  classes  of  work  actually  done  or  materials  actually  delivered,  and  the 
estimated  quantities  stated  in  the  Contractor's  Proposal  or  because  of  the  entire 
omission  of  any  of  the  quantities  of  items  stated  in  the  Contractor's  Proposal. 

If  a  more  concise  clause  is  desired  the  following  is  suggested : 

C.  It  is  understood  and  agreed  that  the  estimated  quantities  of  the  various 
classes  of  work  or  materials  specified  in  the  proposal  are  approximate  and  for  the 
purpose  only  of  comparing  the  bids  on  a  uniform  basis  and  the  Contractor  shall 
make  no  claim  for  damages  for  anticipated  profit,  or  for  loss,  or  otherwise  against 
the  City  or  any  member  of  the  Board  because  of  any  difference  between  said  esti- 
mated quantities  and  the  quantities  actually  done  or  furnished. 

The  following  clause  has  been  used : 

D.  The  Contractor  agrees  that  the  estimated  quantities  hi  the  Notice  to  Con- 
tractors are  only  for  the  purpose  of  comparing  on  a  uniform  basis  the  bids  offered 
for  the  work  under  this  contract,  and  he  further  agrees  that  he  is^satisfied  with  and 
will  at  no  time  dispute  the  said  estimated  quantities  as  a  means  of  comparing  the 
bids  aforesaid ;   that  he  will  make  no  claim  for  anticipated  profits  or  for  loss  of 
profit  because  of  a  difference  between  the  quantities  of  the  various  classes  of  work 
actually  done  or  of  the  material  actually  furnished  and  the  said  estimated  quantities ; 
and  he  agrees  that  neither  the  parties  of  the  first  part,  nor  the  Board,  or  any  of  them 
are  held  responsible  if  in  the  construction  of  the  work  any  of  the  said  estimated 
quantities  should  be  found  to  be  not  even  approximately  correct. 


ADDITIONAL  CONTRACT  FORMS  17-9 

This  is  much  in  line  with  the  discussion  in  the  previous  chapter, 
but  has  a  few  points  of  difference  sufficient  to  justify  its  use  here.  An- 
other form  introduces  features  not  included  in  the  previous  chapter : 

E.  The  City  shall  have  the  power  to  vary,  extend,  increase  or  diminish  the 
quantity,  to  change  the  order  or  type  of  work,  or  dispense  with  a  portion  thereof  at 
any  time  without  impairing  the  contract,  without  changing  the  unit  prices  to  be 
paid,  without  in  any  way  impairing  the  bond  or  releasing  the  sureties  thereof ;  and 
no  payment  of  any  kind  will  be  made  on  account  of  work  not  done.     In  case  of 
reduction  of  amount,  due  to  change  in  plans,  if  the  total  sum  paid  to  the  Contractor 
for  the  whole  work  done  on  the  given  contract  is  as  much  as  ninety  per  cent  of  the 
estimated  sum  which  would  have  been  paid  if  no  change  had  been  made,  no  allow- 
ance will  be  due  except  payment  for  actual  amounts  done ;  but  if  the  total  amount  is 
less  than  ninety  per  cent,  an  allowance  will  be  made,  and  will  be  paid  by  the  City 
on  account  of  administration  and  plant  costs,  such  amount  to  be  fixed  by  the  City. 
In  case  of  increase  in  amounts  of  work,  payment  for  the  whole  quantities  at  the 
unit  prices  bid  for  the  work  of  the  classes  so  increased,  shall  be  full  and  complete 
compensation  for  the  work  done,  no  matter  how  much  increased.     In  case  the 
change  involves  the  execution  of  work  of  a  class  not  herein  provided  for,  the  Con- 
tractor shall,  on  direction  of  the  City,  perform  same  as  provided  for  in  the  following 
article  under  the  clause  "Unclassified  Work." 

Another  form  somewhat  similar  in  purpose  is  this : 

F.  An  increase  or  decrease  in  said  amount  of  work  to  be  done  shall  not  con- 
stitute grounds  for  damage  or  anticipated  profit  claims,  the  Contractor  being  en- 
titled only  to  compensation  for  the  actual  work  done  at  the  prices  named. 

A  section  is  introduced  in  many  Contract  forms  providing  for  liquidated 
damages.  No  clause  of  this  sort  is  found  in  the  Uniform  Contract  Form 
of  the  preceding  chapter.  A  place  usual  for  such  a  clause  is  closely  follow- 
ing a  statement  that  "time  is  of  the  essence  of  this  Contract." 

59.  In  case  the  work  embraced  in  this  contract  shall  not  be  completed  by  the 
time  herein  appointed,  the  Contractor  shall  pay  to  the  Commonwealth  as  liquidated 
damages  and  in  full  compensation  for  such  delay,  the  sum  of  twenty-five  dollars 
($25.)  for  each  and  every  day  beyond  the  time  herein  stipulated  for  the  completion 
of  the  work,  until  said  work  shall  be  completed. 

Other  forms  provide : 

A.  Which  sum  is  agreed  upon,  not  as  a  penalty,  but  as  fixed  and  liquidated 
damages  for  each  day  of  such  delay,  to  be  paid  in  full  and  subject  to  no  deduction. 
If  the  payments  due  the  Contractor  are  less  than  the  amount  of  such  liquidated 
damages,  the  Contractor  and  his  surety  shall  pay  the  balance  to  said  Commission. 

B.  It  is  therefore  covenanted  and  agreed  that  in  case  the  said  Contractor  shall 
fail  or  neglect  to  complete  the  work  herein  specified  on  or  before  the  date  herein- 
before fixed  for  completion,  the  said  Contractor  shall  and  will  pay  the  said  City  the 


17—10  ADDITIONAL   CONTRACT  FORMS 

sum  of  Fifty  Dollars  ($50.)  for  each  and  every  day  the  Contractor  shall  be 
in  default  in  the  time  of  completion  of  this  contract. 

Said  sum  of  Fifty  Dollars  ($50.)  per  day  is  hereby  agreed  upon,  fixed  and 
determined  by  the  parties  hereto  as  the  liquidated  damages  which  said  City  will 
suffer  by  reason  of  such  defaults,  and  not  by  way  of  a  penalty.  In  case  the  said 
Contractor  does  not  complete  the  work  covered  by  this  contract  on  or  before  the 
time  specified  herein  for  the  completion  of  the  said  work,  the  Engineer  shall  decide 
the  number  of  days  the  said  Contractor  is  in  default,  and  the  decision  of  said  Engi- 
neer shall  be  final  and  binding  upon  both  parties  hereto.  It  is  further  agreed  that  if 
said  Board  shall  accept  any  work  or  make  any  payments  under  this  contract  after 
any  such  default,  such  acceptance,  payment  or  payments  shall  not  in  any  respect 
constitute  a  waiver  or  modification  of  any  of  the  provisions  hereof,  and  particularly 
the  provisions  in  regard  to  Time  and  Liquidated  Damages  for  delays. 

C.  The  date  of  completion  will  be  fixed  by  the  date  upon  which  the  Director 
of  Public  Service  shall  finally  inspect  and  issue  to  the  Contractor  a  statement  of 
acceptance  of  the  completed  structure. 

Another  form  reads : 

D.  Which  sum  of  fifty  dollars  ($50.)  per  day,  in  view  of  the  difficulty  of  per- 
fectly estimating  the  damages  due  to  delay,  is  hereby  agreed  upon  as  the  liquidated 
damages  that  the  Commission  will  suffer  by  reason  of  such  delay,  and  not  as  a 
penalty. 

A  more  concise  reading  in  use  is  this : 

E.  The  amount  or  amounts  thus  withheld  shall  not  be  considered  a  penalty, 
but  shall  be  considered  liquidated  damages,  which  are  fixed  and  agreed  to  hereby 
in  advance  by  the  contracting  parties  as  the  actual  cost  to  the  City  of  such  delay. 

It  is  doubtful  whether  this  would  be  upheld  if  evidence  should  be 
offered  to  show  that  the  sum  stated  was  in  fact  unreasonable.  The  court 
might  not  refuse  to  admit  such  evidence  even  under  this  agreement. 

It  is  well  established  as  a  matter  of  law  that  for  a  breach  of  Contract 
(and  a  failure  to  complete  in  time  is  such  a  breach)  the  remedy  is  the  pay- 
ment of  the  damages  actually  suffered.  The  courts  seem  to  have  found 
reason  to  resist  the  fixing  of  any  other  measure  of  damages,  and  they 
especially  object  to  a  penalty  for  non-performance.  The  use  of  the  words 
"liquidated  damages"  does  not  remove  the  difficulty;  if  the  court  thinks 
that  in  fact  the  sum  stated  (or  any  provision  named)  is  in  effect  a  penalty, 
it  will  refuse  to  sustain  it. 

There  are  two  cases  where  "liquidated  damages"  meet  the  approval 
of  the  courts.  First :  where  the  parties  to  a  Contract  have  in  advance 
computed,  ascertained,  and  agreed  upon  a  sum  as  "liquidated  damages." 
Second  :  where  the  amount  of  damage  cannot  be  definitely  determined  and 
a  sum  is  fixed  and  stated  as  "liquidated  damages."  In  this  second  case, 
however,  the  sum  so  fixed  must  appear  to  the  court  to  be  reasonable ;  other- 


ADDITIONAL  CONTRACT  FORMS  17-11 

wise  the  court  will  regard  it  as  a  penalty.  In  construction  Contracts, 
where  blank  forms  are  provided  for  a  number  of  bidders,  it  can  hardly 
be  maintained  that  the  parties  have  beforehand  computed  and  ascer- 
tained the  damage;  it  should,  however,  be  true  that  the  liquidated 
damages  mentioned  are  reasonable  in  view  of  the  losses  from  the  delay. 
Any  attempt  to  overdo  the  matter,  or  to  put  undue  pressure  on  the  Con- 
tractor in  this  clause  is  likely  to  result  in  the  court's  decision  that  a 
" penalty"  is  provided.  The  court  will  look  beyond  the  words  and 
determine  the  essential  fact  whether  the  provision  does  effect  a  penalty. 

The  following  readings  apparently  attempt  to  cover  the  essential 
requirements : 

F.  It  is  understood  and  agreed  that  Time  is  of  the  essence  of  this  contract, 
and  that  a  failure  on  the  part  of  said  Contractor  to  complete  the  work  herein 
specified  in  the  time  herein  specified,  will  result  in  great  loss  and  damage  to  said 
City,  and  that  on  account  of  the  peculiar  nature  of  such  loss  and  damage  it  is  diffi- 
cult, if  not  impossible,  to  accurately  ascertain  and  definitely  determine  the  amount 
thereof. 

Said  sum  of  Fifteen  Dollars  ($15.00)  per  day  for  default  in  the  time  of 
complete  delivery  of  all  said  metal  work  is  hereby  agreed  upon,  fixed  and  determined 
by  the  parties  hereto  as  the  liquidated  damages  which  said  City  will  suffer  by  reason 
of  such  default,  and  not  by  way  of  a  penalty. 

G.  Time  of  completion  is  of  the  essence  of  this  contract  and  should  the  Con- 
tractor fail  to  complete  the  work  within  the  number  of  days  specified  in  his  proposal, 
he  shall  be  liable  to  the  City,  for  each  additional  working  day  until  completion  of  the 
work,  the  amount  named  in  the  Instructions  to  Bidders  as  the  daily  cost  of  inspec- 
tion and  daily  value  of  the  use  of  the  completed  work,  which  said  amount  per  day 
was  considered  in  determining  that  the  Contractor  was  the  lowest  and  best  bidder. 
Said  amount  per  working  day  will  be  deducted  from  the  moneys  which  may  be 
due  the  Contractor  from  the  City,  not  as  a  penalty,  but  estimated  and  hereby  agreed 
as  liquidated  and  fixed  damages  to  the  City  from  failure  to  complete  the  work  at 
the  time  specified ;  time  of  completion  of  the  contract  being  an  essential  element  in 
the  consideration.     In  case  the  Director  of  Public  Service  grants  an  extension  of 
time  to  the  Contractor,  the  said  amount  per  working  day  will  be  computed  from  the 
date  to  which  the  time  is  extended,  until  the  actual  completion  of  the  work. 

It  is  further  agreed  that  the  permitting  of  the  Contractor  to  complete  the  work 
or  any  part  of  it  after  the  time  fixed  for  its  completion  shall  in  no  wise  operate  as  a 
waiver  on  the  part  of  the  City  of  any  of  its  rights  under  this  contract. 

Another  form  provides  for : 

H.  Liquidated  damages  $25.  per  day  and  in  addition  thereto  the  cost  of  the 
time  of  supervision  and  inspection  during  the  interval  of  time  between  the  con- 
templated and  actual  date  of  completion  of  said  work. 

The  objections  are  unusually  well  met  in  the  following : 

/.  It  is  mutually  understood  and  agreed  by  and  between  the  parties  hereto  that 
considerable  damage  will  be  sustained  by  the  City  in  case  the  Contractor  does  not 


17-12  ADDITIONAL  CONTRACT  FORMS 

complete  this  contract  within  the  time  herein  provided  for  completion,  but  that  it 
will  be  difficult,  if  not  quite  impossible,  for  the  City  to  establish  either  the  full 
extent  or  the  amount  of  said  damage  under  the  ordinary  rules  of  evidence. 

It  is,  therefore,  understood  and  agreed  by  and  between  the  parties  hereto  that 
the  payment  by  the  Contractor  to  the  City  of  the  sum  of  One  Hundred  Dollars 
($100.)  per  day  for  every  day  the  Contractor  fails  to  substantially  complete  the 
work  to  be  done  under  this  contract,  according  to  the  terms  hereof,  will  be  a  fair 
and  reasonable  compensation  to  the  City  for  the  damage  sustained  by  it  by  reason 
of  failure  so  to  complete  said  contract ;  and  that  the  payment  of  such  sum  by  the 
Contractor  will  not,  in  any  way,  constitute  the  infliction  upon  him  of  a  penalty  by 
the  City. 

It  is  further  understood  and  agreed  by  the  parties  hereto  that  the  Contractor 
shall  pay  to  the  City,  as  liquidated  damages  and  not  as  a  penalty,  etc. 

It  would  be  difficult  to  overcome  this  as  a  matter  of  law,  unless  the 
sum  stated  should  seem  to  the  court  clearly  unreasonable. 

A  reading  which  apparently  will  stand  (in  view  of  the  discussion  of 
Article  26)  is  as  follows : 

J.  If  the  Contractor  fails  to  complete  the  work  in  accordance  with  this  Con- 
tract and  Specifications  at  the  time  specified,  he  shall  pay  to  the  Company  for  each 
and  every  day  thereafter  including  Sundays  and  holidays  that  the  completion  is 
delayed,  such  sum  not  exceeding dollars  ($...)  per  day  as  the  Chief  Engi- 
neer shall  determine  to  be  the  reasonable  damages  suffered. 

This  provides  for  reasonable  damages  and  provides  a  means  for  their 
determination  which  the  courts  consistently  sustain  as  lawful. 

The  provision  for  liquidated  damages  is  probably  introduced  often- 
times in  Contracts  as  a  spur  to  urge  Contractors  to  finish  on  time.  Even 
for  this  purpose,  the  amount  stated  should  not  be  in  excess  of  the  reason- 
able damages. 

The  opinion  has  often  been  held  by  Engineers  and  others  that  if  liq- 
uidated damages  are  specified  for  delay,  a  premium  must  also  be  specified 
for  completion  at  a  date  earlier  than  provided  in  the  Contract.  Such 
opinion  is  not  well  founded.  In  some  cases  such  a  provision  is  reasonable 
and  wise,  in  other  cases  not.  The  following  form  provides : 

K.  If  the  Contractor  fails  to  fully  and  entirely  complete  and  finish  the  work  in 
conformity  to  the  terms  and  provisions  of  these  specifications,  he  shall  pay  to  the 
City  the  sum  of  fifty  dollars  ($50.)  for  each  and  every  day  thereafter,  including 
Sundays  and  Holidays  that  the  finishing  of  the  contract  is  delayed,  which  sum  shall 
be  construed  as  stipulated  and  liquidated  damages  and  not  as  a  penalty  .  .  .  and 
if  the  Contractor  shall  fully  complete  the  same  before  the  time  specified,  he  shall 
receive  an  extra  or  additional  payment  of  twenty-five  dollars  ($25.)  etc. 

In  this  connection  many  Contract  forms  provide  for  delays  from  various 
causes.  The  quotations  below  from  various  sources  are  self-explanatory : 


ADDITIONAL  CONTRACT  FORMS  17-13 

60.  Should  the  Contractor  be  obstructed  or  delayed  in  the  commencement, 
prosecution  or  completion  of  the  work  hereunder  by  any  necessary  or  unavoidable 
act  or  delay  of  the  Board,  or  unavoidable  acts  or  delays  on  the  part  of  railroads  in 
transporting  material  consigned  to  said  Board,  or  by  riot,  insurrection,  war,  pesti- 
lence, acts  of  public  authorities,  fire,  lightning,  earthquake,  cyclone,  or  through  any 
default  of  other  parties  under  contract  with  said  Board,  and  if,  in  the  opinion  of  the 
Engineer,  the  ultimate  completion  of  the  entire  work  under  this  contract  is  delayed 
thereby,  then  the  time  herein  fixed  for  the  completion  of  all  work  under  this  con- 
tract shall  be  extended  for  a  period  equivalent  to  the  time  said  work  as  a  whole  is, 
in  the  opinion  of  the  Engineer,  thereby  delayed. 

A.  If  legal  obstructions  to  the  prosecution  of  the  work  arise,  the  delay  shall 
operate  to  extend  the  time  for  the  completion  of  the  part  or  parts  of  the  work 
obstructed,  for  the  length  of  time  the  obstruction  continues  and  no  longer,  but  no 
damages  shall  be  claimed  or  allowed  the  Contractor  for  any  such  delay. 

B.  But  no  injunction,  strike  or  interference  of  public  authority  shall  be  ground 
for  such  extension  except  if  and  from  the  time  when  the  Contractor  shall  give  the 
Commission  notice  of  the  injunction  or  other  cause  of  delay,  with  copies  of  the  in- 
junction or  other  orders  and  of  the  papers  upon  which  the  same  shall  have  been 
granted.     The  Commission  and  the  City  or  either  shall  be  accorded  the  right  to 
intervene  or  become  a  party  to  any  suit  or  proceeding  in  which  any  such  injunction 
shall  be  obtained,  and  to  move  to  dissolve  the  same  or  otherwise,  as  the  Commission 
or  the  City  may  deem  proper.     If  necessary  the  Corporation  Counsel  or  the  Counsel 
to  the  Commission  or  both  shall  be  authorized  by  the  Contractor  to  appear,  for  that 
purpose,  as  counsel  or  attorneys  for  him. 

C.  Neither  an  extension  of  time,  for  any  reason,  beyond  that  fixed  in  the  Bid 
for  the  completion  of  the  work,  nor  the  acceptance  of  any  part  of  the  work  called  for 
by  this  contract  shall  be  deemed  to  be  a  waiver  by  the  Commission  of  the  right  to 
abrogate  this  contract  for  abandonment  or  delay,  in  the  manner  provided  for  in 
Article  L  in  this  agreement. 

D.  Whenever,  within  the  limits  of  the  contract  time  as  fixed  in  the  Proposal 
or  as  amended  by  any  modification  of  the  contract,  the  temperature,  between  the 
hours  of  six  (6)  A.M.,  and  six  (6)  P.M.,  as  officially  recorded  by  the  Dayton  office  of 
the  U.  S.  Weather  Bureau,  shall  register  thirty-two  (32)  degrees  Fahrenheit  or 
lower,  the  Contractor  will  be  granted  an  extension  of  contract  time  of  one  day  for 
each  such  day  of  cold  weather. 

Whenever,  within  the  limits  of  the  contract  time,  fixed  as  previously  noted, 
floods  in  the  local  rivers,  or  other  unforeseen  acts  of  Providence,  operate  to  delay 
the  completion  of  the  work,  the  Board  may  extend  the  time  of  this  contract  by  such 
amount  as  may  be  certified  in  writing  by  the  Chief  Engineer  to  be  just. 

Rainy  or  stormy  weather  will  not  be  regarded  as  proper  grounds  for  the  exten- 
sion of  contract  time,  except  when  excessive  or  prolonged. 

Many  classes  of  work  need  not  be  suspended  on  account  of  frost. 

E.  In  the  event  that  any  material  alterations  or  additions  are  made  as  herein 
specified,  which,  in  the  opinion  of  the  Engineer  will  require  additional  time  for  the 
execution  of  all  work  under  this  contract,  then,  in  that  case,  the  time  of  completion 


17-14  ADDITIONAL   CONTRACT  FORMS 

of  the  work  shall  be  extended  by  such  a  period  or  periods  of  time  as  may  be  fixed 
by  said  Engineer,  and  his  decision  shall  be  final  and  binding  upon  both  parties 
hereto,  provided  that  in  such  case  the  Contractor,  within  four  (4)  days  after  being 
notified  in  writing  of  such  alterations  or  additions,  shall  request  in  writing  an  exten- 
sion of  time,  but  no  extensions  of  time  shall  be  given  for  any  minor  alterations  or 
additions,  and  the  provisions  of  this  paragraph  shall  not  otherwise  alter,  change  or 
invalidate  the  provisions  of  this  contract,  with  reference  to  Liquidated  Dam- 
ages, and  the  said  Contractor  shall  not  be  entitled  to  any  damages  or  compensa- 
tion from  the  said  Board  on  account  of  such  additional  time  required  for  the  execu- 
tion of  the  work. 

F.  The  time  stipulated  within  which  to  complete  the  Work  is  based  upon  the 
quantities  of  the  various  items  entering  into  the  work  as  stated  in  the  form  of 
proposal,  which  are  given  solely  for  the  purpose  of  classifying  bids.  In  case  these 
quantities  are  exceeded  or  diminished  then  an  extension  or  diminution  of  the  term 
of  this  contract  shall  be  made.  It  is,  however,  understood  and  agreed  that  in  case 
an  increase  in  any  one  item  is  balanced  or  offset  by  diminution  of  other  items,  no 
change  in  the  term  shall  be  made,  and  in  any  event  the  Engineer  shall  determine  the 
amount  of  extension  or  diminution  of  time  in  respect  of  the  relative  increase  or 
reduction  in  the  quantities  involved  in  the  final  completion. 

In  many  Contracts  provision  is  made  for  maintenance  and  repairs  for 
a  definite  term  following  the  ordinary  completion  of  the  work.  Such  a 
clause  is  much  used  in  connection  with  street  pavements.  In  other  cases 
the  Contract  provides  for  repairs  only  for  a  time  after  completion. 

The  following  refers  to  street  work : 

61.  The  Contractor  hereby  agrees  to  repair  all  defects  in  the  roadway  pave- 
ment or  other  work  done  under  this  contract  and  arising,  in  the  opinion  of  the  City, 
out  of  the  use  of  defective  material,  settlement  of  foundation  or  improper  workman- 
ship in  the  construction  thereof  and  which  from  such  causes  may  become  necessary 
during  the  guarantee  period  of  either  three  (3)  or  five  (5)  years  after  the  date  of  the 
approval  by  the  Director  of  Public  Service  of  the  Engineer's  final  estimate,  without 
expense  to  the  party  of  the  first  part,  and  the  Contractor  agrees  to  make  such  repairs 
when  and  as  directed  by  the  party  of  the  first  part  by  written  notice  served  upon 
him ;  and  if  after  having  received  such  notice,  the  Contractor  fails  to  make  such 
repairs  within  five  (5)  days  from  the  receipt  of  such  written  notice,  the  party  of 
the  first  part  may  thereupon  cause  satisfactory  repairs  to  be  made  and  charge  the 
expense  thereof  to  the  Contractor. 

The  City  will  repair  and  maintain  all  openings  made  in  the  pavement  subsequent 
to  its  acceptance  by  the  City. 

A  similar  clause  deals  with  sewer  work  and  is  differently  phrased : 

A.  The  Contractor  hereby  agrees  that  all  defects  in  the  work  done  under  this 
contract  arising,  in  the  opinion  of  the  City,  out  of  the  use  of  defective  materials  or 
improper  workmanship  in  the  construction  thereof,  which  may  become  apparent 
during  the  period  of  one  (l)  year  after  the  date  of  the  approval  of  the  Engineer's 
final  estimate  by  the  Director  of  Public  Service,  shall  be  remedied  by  him  to  the 
satisfaction  of  and  without  expense  to  the  City.  The  City  shall  notify  the  Con- 


ADDITIONAL  CONTRACT  FORMS  17-15 

tractor  in  writing  by  stating  the  defects  and  repairs  to  be  made,  and  the  Contractor 
agrees  to  remedy  such  defects  and  to  make  such  repairs  when  and  as  directed  by 
the  City,  and  to  start  the  said  work  within  five  (5)  days  from  the  date  of  said  noti- 
fication, and  upon  his  failure  to  start  or  do  the  said  work,  the  City  may,  at  the 
expiration  of  five  (5)  days,  thereupon  cause  the  said  defects  to  be  remedied  and  the 
repairs  to  be  made  and  shall  charge  the  cost  and  expense  thereof  to  the  Contractor 
or  his  surety. 

Such  work  may  also  include  the  re-setting  of  any  and  all  castings  and  the  re- 
filling and  levelling  off  of  sewer  trenches  in  private  property  or  rights-of-way. 

The  provision  below  refers  to  retaining  moneys  for  guaranteed  work : 

B.  The  City  will  retain  five  (5)  per  cent  of  the  entire  cost  of  the  work  done  by 
the  Contractor  for  the  entire  period  of  three  (3)  years  from  the  date  of  the  Engineer's 
certificate  of  the  final  estimate.     The  Contractor  may,  at  his  option,  furnish  a 
surety  bond  for  ten  (10%)  per  cent  of  the  amount  of  the  work  done  by  him,  to  be  in 
force  for  the  entire  period  of  five  (5)  years,  in  lieu  of  the  five  (5)  per  cent  cash 
retainer.     This  cash  retainer  or  surety  bond  being  to  insure  compliance  with  the 
terms  of  the  guarantee.     The  Director  of  Public  Service  shall  have  the  power  to 
spend  all  or  any  part  of  such  retainer  to  make  such  repairs  at  the  expiration  of  the 
guarantee  period  as  above  specified. 

Whatever  remains  to  the  credit  of  the  Contractor,  provided  all  repairs  have 
been  made  satisfactory  to  said  Director,  shall  be  paid  to  the  Contractor. 

The  following  refer  more  specifically  to  repairs : 

C.  If,  at  any  time  before  twelve  months  have  elapsed  from  the  date  of  the 
completion  of  the  work  contemplated  in  this  contract  and  any  amendment  thereof 
or  order  for  extra  work  as  herein  provided,  any  part  shall,  in  the  opinion  of  the  Engi- 
neer, require  repairing,  the  Engineer  may  notify  the  Contractor,  in  person  or  by 
mail,  to  make  the  required  repairs.    If  the  Contractor  neglects  to  make  such  repairs 
promptly,  to  the  satisfaction  of  the  Engineer,  then  the  Engineer  may  employ  other 
persons  to  make  the  same  and  the  expense  thereof  shall  be  paid  by  the  Contractor. 
The  Commission  may  cause  the  expenses  of  the  repairs  to  be  paid  out  of  any  money 
due  the  Contractor  on  account  of  this  contract. 

D.  If  any  defects  or  omissions  in  said  work  are  hidden  or  concealed,  so  that  a 
reasonable  careful  inspection  at  the  time  of  acceptance  of  said  work  would  not  have 
disclosed  them,  and  such  defects  or  omissions  appear  or  are  disclosed  within  three 
(3)  years  after  the  final  acceptance  of  said  work,  then  said  Contractor  agrees,  on 
notice  given  him  in  writing  by  the  Chief  Engineer  that  such  defects  or  omissions 
exist,  to  immediately  correct  and  make  good  the  same,  and  in  the  event  that  he  fails, 
refuses  or  neglects  so  to  do,  then  said  Sanitary  District  may  correct  and  make  good 
the  same  and  said  Contractor  hereby  agrees  to  pay  on  demand  the  cost  and  expense 
of  doing  such  work. 

E.  The  Contractor  agrees  to  make  all  the  needed  repairs  on  the  said  work 
during  a  period  of  one  year  after  its  final  completion ;  and  he  agrees  that  the  Board 
is  authorized  to  retain  out  of  the  moneys  payable  to  him  under  this  agreement  the 
sum  of  two  per  cent  on  the  amount  of  the  contract,  and  to  expend  the  same,  or  as 
much  thereof  as  may  be  required,  in  making  the  aforesaid  repairs  to  the  satisfac- 


17-16  ADDITIONAL  CONTRACT  FORMS 

tion  of  the  Engineer,  if  within  ten  days  after  the  delivery  or  mailing  of  a  notice  in 
writing  to  the  Contractor  or  his  agents,  they  shall  neglect  to  make  the  aforesaid 
needed  repairs;  provided,  however,  that  in  case  of  an  emergency  where  in  the 
opinion  of  the  Engineer,  delay  would  cause  serious  loss  or  damage,  the  Board  may 
make  repairs  without  previous  notice  and  at  the  expense  of  the  Contractor. 

F.  The  Contractor  shall  repair  and  make  good  all  defects  or  deficiencies  in  work 
or  material  appearing  during  a  period  of  nine  months  following  the  completion  of  the 
work  contemplated  herein,  and  if  he  shall  fail  to  do  so  within  five  days  after  written 
notice  of  necessary  repairs  has  been  mailed  to  him  by  the  Engineer,  said  repairs 
may  be  made  by  the  party  of  the  first  part  and  paid  for  out  of  the  funds  to  be  re- 
tained by  it  for  the  purpose. 

G.  It  is  further  agreed  that  after  the  final  completion  of  the  work  the  party  of 
the  first  part  may  retain  out  of  the  payment  due  the  Contractor  such  sums  of  money 
not  exceeding  three  (3)  per  cent  of  the  total  contract  price  as  may  in  the  judgment 
of  the  party  of  the  first  part  be  necessary  to  cover  the  cost  of  repairs  as  set  forth 
above,  and  the  sums  thus  retained  shall  be  paid  to  the  Contractor  after  the  expira- 
tion of  the  nine  months  referred  to  in  the  above  paragraph  on  Repairs,  and  when 
such  repairs  shall  be  well  and  satisfactorily  made. 

The  following  clauses  might  have  been  discussed  in  connection  with 
Sections  9,  11,  28,  29,  but  they  introduce  some  additional  features. 

62.  The  Contractor  is  to  furnish,  free  of  charge,  all  stakes  and  such  temporary 
structures  as  may  be  necessary  for  marking  and  maintaining  points  and  lines  given 
by  the  Engineer  for  the  building  of  the  work,  and  is  to  give  said  Engineer  such 
facilities  and  materials  for  giving  said  lines  and  points  as  he  may  require ;  and  the 
Engineer's  marks  must  be  carefully  preserved. 

A.  All  necessary  lines,  levels  and  grades  shall  be  given  to  the  Contractor,  who 
shall  provide  at  his  own  expense  such  forms,  materials  and  assistance  as  may  be 
required  by  the  Engineer.     If  the  Contractor  through  wilfumess  or  carelessness 
removes  or  permits  to  be  removed  said  reference  marks  before  the  prosecution  of  the 
work  requires  it  they  shall  be  replaced  at  his  expense. 

It  has  previously  been  stated  that  some  Contractors  object  to  furnishing 
stakes  and  forms  at  their  own  expense,  and  with  good  reason. 

B.  The  plans  are  intended  to  give  approximately  the  line,  grade  and  shape  of 
the  structure,  typical  details,  etc.,  but  the  exact  determination  of  all  these  is  to  be 
made  from  tune  to  time  by  the  Engineer. 

C.  The  work  during  its  progress  and  on  its  completion  must  conform  to  the 
lines  and  levels  given  by  the  Engineer,  and  must  be  done  in  accordance  with  the 
plans  and  directions  given  by  him  from  time  to  time,  subject  to  such  modifications 
or  additions  as  shall  be  deemed  necessary  during  the  execution  of  the  ^  work ;  and 
in  no  case  will  any  work  in  excess  of  the  requirements  of  the  plans  be  paid  for  unless 
ordered  in  writing  by  the  Engineer  or  his  agent  specially  authorized  thereto  in 
writing. 


ADDITIONAL   CONTRACT  FORMS  17-17 

In  a  number  of  Contracts  the  Commissioners  have  thought  it  wise  to 
specifically  provide  against  any  personal  responsibility  on  their  part,  in 
some  cases  including  employees  also  in  this  exemption. 

63.  The  members  of  the  Commission  and  their  employees  shall  not  be  person- 
ally responsible  for  any  liability  arising  under  this  contract. 

A.  In  no  event  whatever  shall  the  Contractor  be  entitled  to  any  compensation 
from  the  commissioners,  their  servants  or  agents,  on  account  of  any  acts  or  omissions 
under  or  growing  out  of  this  contract. 

B.  The  Contractor,  by  accepting  and  signing  this  contract,  hereby  expressly 
releases  and  discharges  the  individual  members  of  the  Commission,  and  each  of 
them,  from  any  and  all  personal  liability  of  every  name  and  nature. 

A  provision  somewhat  similar  in  character  specifies  a  release  to  the 
City  upon  the  final  payment: 

64.  The  acceptance  by  the  Contractor  of  the  last  payment  aforesaid  shall 
operate  as  and  shall  be  a  release  to  the  Commonwealth,  the  Board,  and  every 
member  and  agent  thereof,  from  all  claim  and  liability  to  the  Contractor  for  any- 
thing done  or  furnished  for,  or  relating  to,  the  work,  or  for  any  act  or  neglect  or  the 
Commonwealth  or  of  any  person  relating  to  or  affecting  the  work,  except  the  claim 
against  the  Commonwealth  for  the  remainder,  if  any  there  be,  of  the  amounts  kept 
or  retained  as  provided  in  this  contract. 

A.  The  payment  of  the  final  amount  due  under  this  contract  and  the  adjust- 
ment and  payment  of  the  bills  rendered  for  work  done  in  accordance  with  any  altera- 
tions of  the  same  shall  release  the  City  from  any  and  all  claims  or  liability  on 
account  of  work  performed  under  this  contract  or  any  alteration  thereof. 

Objection  to  this  clause  has  been  made  from  the  Contractor's  side. 
It  does  not  seem  unreasonable,  however,  that  the  Company  or  City  should 
expect  the  final  settlement  to  be  a  settlement  in  full.  It  might  cover  the 
objection  in  part  if  the  clause  should  read : 

B.  Unless  otherwise  agreed  "by  the  parties,  the  acceptance,  etc. 
The  following  is  also  somewhat  along  the  same  line : 

C.  If  the  Contractor  shall  claim  compensation  for  any  damage  sustained  by 
reason  of  the  acts  of  the  Board,  or  its  agents,  he  shall,  within  5  days  after  the  sus- 
taining of  such  damage,  make  a  written  statement  of  the  nature  of  the  damage  sus- 
tained, to  the  Engineer.     On  or  before  the  fifteenth  day  of  the  month  succeeding 
that  in  which  any  such  damage  shall  have  been  sustained,  the  Contractor  shall 
file  with  the  Engineer  an  itemized  statement  of  the  details  and  amount  of  such 
damage,  and  unless  such  statement  shall  be  made  as  thus  required,  his  claim  for 
compensation  shall  be  forfeited  and  invalidated,  and  he  shall  not  be  entitled  to 
payment  on  account  of  any  such  damage. 


17-18  ADDITIONAL  CONTRACT  FORMS 

A  clause  like  the  following  is  found  in  some  Contracts : 

65.  All  materials  furnished  under  this  agreement,  unless  otherwise  provided, 
shall  be  the  best  of  their  respective  kinds. 

The  desirability  of  this  clause  may  well  be  questioned,  at  least  for  general 
use.  In  many  Contracts  parts  of  the  work  do  not  require  the  highest 
grade  of  material.  This  is  discussed  further  in  the  chapter  on  Specifica- 
tions. 

To  avoid  the  possibility  of  ambiguity,  the  following  clause  may  be 
found  in  many  Contracts : 

66.  Wherever  in  the  specifications  or  upon  the  drawings  the  words  directed, 
required,  permitted,  ordered,  designated,  prescribed,  or  words  of  like  import  are 
used,  it  shall  be  understood  that  the  direction,  requirements,  permission,  order, 
designation,  or  prescription  of  the  Engineer  is  intended,  and  similarly  the  words, 
approved,  acceptable,  satisfactory,  or  words  of  like  import,  shall  mean  approved 
by,  or  acceptable,  or  satisfactory  to  the  Engineer,  subject  in  each  case  to  the  final 
determination  of  the  Board,  unless  otherwise  expressly  stated. 

As  to  the  necessity  or  advisability  of  such  a  clause,  engineers  or  attor- 
neys may  readily  differ. 

A  similar  definition  is  sometimes  made  as  to  notice : 

A.  The  word  "notice"  to  mean  a  written  notice. 

To  cover  any  possible  question  as  to  the  Contract  calling  for  a  com- 
pleted work,  provisions  of  the  following  sort  are  sometimes  introduced  : 

67.  The  Contractor  shall  be  held  responsible  for  any  or  all  materials  or  work 
done  to  the  full  amount  of  all  payments  made  thereon,  and  he  will  be  required  to 
make  good  at  his  own  cost  any  injury  or  damage  which  said  materials  or  work  may 
sustain  from  any  sources  or  causes  whatever  before  the  final  acceptance  thereof. 

A.  All  work,  of  whatever  land,  which,  during  its  progress  and  before  it  is 
finally  accepted,  may  become  damaged  from  any  cause,  shall  be  removed  and 
replaced  by  good  and  satisfactory  work. 

It  is  doubtful  if  such  a  clause  is  necessary,  but  the  following  clause  covers 
a  point  about  which  there  might  readily  be  some  uncertainty  except  for 
this  provision : 

B.  The  Contractor  shall  provide  suitable  and  adequate  storage  room  for  mate- 
rials during  the  progress  of  the  work  and  be  responsible  for  any  loss  or  damage  to 
materials  furnished  by  the  Town  as  well  as  those  furnished  by  him. 

The  following  explains  itself : 

68.  The  Contractor  may  be  required  to  prosecute  the  work   at  night   if, 
for  any  reason,  the  work  is  delayed  and  not  progressing  at  a  rate  to  enable  it 


ADDITIONAL  CONTRACT  FORMS  17-19 

to  be  completed  at  the  time  specified,  or  if  an  approaching  flood  of  the  Ohio  river, 
or  if  an  approaching  cold  wave  makes  such  night  work  especially  desirable,  and  if 
at  any  time  the  Engineer  shall,  in  writing,  direct  the  Contractor  to  prosecute  the 
work  at  night,  he  agrees  to  promptly  comply  with  said  demand  and  provide  suitable 
and  sufficient  lights  therefor.  No  night  work  will  be  ordered  or  permitted  within 
the  property  of  the  Cemetery  Co. 

For  night  work,  if  any  be  performed  by  written  order  of  the  Engineer,  the  Con- 
tractor may  or  may  not  receive  extra  payment,  as  in  the  judgment  of  the  Engineer  is 
right  and  proper  under  the  circumstances,  it  being  understood  that  the  compensa- 
tion for  such  work  and  all  expenses  incidental  thereto  is  included  in  the  prices 
stipulated  for  the  various  items  of  this  contract. 

There  are  many  miscellaneous  provisions,  a  few  of  which  are  noted 
below.  Most  of  these  are  not  in  general  use,  but  are  suggestive  and 
worthy  of  mention. 

69.  No  extra  or  customary  measurements  of  any  kind,  unless  specially  noted, 
will  be  allowed  in  measuring  the  work  under  these  specifications ;  but  the  length, 
area,  solid  contents  or  number  only  shall  be  considered  as  the  basis  for  payment  as 
hereinafter  specified. 

Where  the  computation  of  areas  or  volumes  by  exact  geometric  methods  is 
unduly  laborious  or  refined,  the  planimeter  will  be  held  an  instrument  of  precision, 
and  will  be  used  in  the  determination  of  quantities  upon  which  payments  are  based. 

The  measurements  of  the  City  as  to  the  amount  of  the  work  done  shall  be  final 
and  conclusive. 

For  certain  lines  of  work  the  provision  above  may  have  considerable 
point. 

70.  Nothing  in  this  contract  shall  be  considered  as  vesting  in  the  Contractor 
any  right  of  property  in  materials  used,  after  they  shall  have  been  attached  or 
affixed  to  the  work  or  the  soil,  nor  in  materials  which  have  been  estimated  for  partial 
payment,  but  all  such  materials  shall,  upon  being  so  attached  or  affixed  or  estimated, 
become  the  property  of  the  City. 

71.  All  books  and  accounts  kept  by  the  Contractor  in  connection  with  this 
contract  shall  be  open  to  the  inspection  of  the  Chief  Engineer  or  his  properly 
accredited  representative. 

The  Contractor  shall  furnish  the  Engineer  reasonable  facilities  for  obtaining  such 
information  as  he  may  desire  respecting  the  progress  and  execution  of  the  work  and 
the  character  of  the  materials,  including  all  information  necessary  to  determine  the 
cost  of  the  work,  such  as  the  number  of  men  employed,  their  pay,  the  time  during 
which  they  have  worked  on  the  various  classes  of  construction,  the  cost  of  repairs  to 
machinery,  and  other  information  required  by  the  Engineer.  The  Contractor  shall, 
on  request,  furnish  the  Engineer  with  copies  of  expense  bills  for  transportation 
charges  on  all  machinery,  material  and  supplies  shipped  to  or  from  the  work  under 
this  contract. 

This  requires  a  large  amount  of  detail  and  if  made  use  of,  involves 
expense  both  to  the  City  and  to  the  Contractor.  It  appears  not  to  be 


17-20  ADDITIONAL  CONTRACT  FORMS 

largely  included  in  Contracts.    Where  there  is  much  extra  work,  it  may 
be  necessary. 

72.  Whenever  the  requirements  of  the  drawings  necessitate  crossing  over  or 
under  railroads  with  the  structure,  the  Contractor  shall  notify  such  road  or  roads 
not  less  than  one  (1)  week  in  advance  of  any  operations  at  the  crossings,  and  will 
also  make  such  arrangements  for  the  protection  and  maintenance  of  traffic  and  of 
structures  as  will  satisfy  the  City  and  the  division  engineer  or  other  proper  officials 
of  said  railroad. 

This  provides  for  a  special  matter.  Some  might  prefer  to  include  it  in 
the  specifications  rather  than  in  the  Contract. 

73.  Wherever  it  is  required  as  a  part  of  the  contract  to  perform  work  within 
the  limits  of  private  property,  or  in  rights-of-way,  such  work  shall  be  done  in  con- 
formity with  all  agreements  between  the  City  and  such  owners,  and  whether  or  not 
such  a  condition  be  part  of  the  agreement,  care  shall  be  taken  to  avoid  injury  to  the 
premises  entered,  which  premises  shall  be  left  in  a  neat  and  orderly  condition  by  the 
removal  of  rubbish  and  the  grading  of  surplus  materials  and  the  restoration  of  said 
private  property  to  the  same  general  condition  as  at  the  time  of  entry  for  work  to 
be  performed  under  this  contract. 

74.  Advertising  bills  or  signs  shall  not  be  posted  on  any  part  of  the  work, 
except  that  the  name  of  the  Contractor  may  be  displayed.     The  Contractor  shall 
cause  the  notice  "Post  no  bills"  to  be  suitably  displayed,  and  he  shall  enforce  the 
requirement. 

A  section  unusual  in  form  is  shown  below.  Many  features  are  embodied 
in  one  place  or  another  in  the  forms  shown  in  the  preceding  chapter,  but 
perhaps  not  all  of  them : 

75.  As  the  said  payments  become  due  the  Commission  shall  certify  the  amount 
thereof  to  the  Auditor  of  the  Commonwealth  for  payment  by  the  Treasurer. 

Provided,  however,  and  upon  the  express  condition,  that  no  money  shall  at  any 
time  be  due  or  payable  from  the  Commonwealth  to  the  Contractor,  and  no  order 
shall  be  due  from  the  Commission : 

(1)  Unless  all  the  work  to  the  time  in  question  has  been  done  in  the  manner 
set  forth  in  this  contract,  and  to  the  satisfaction  of  the  Engineer,  and  there  has  been 
no  breach  by  the  Contractor  of  any  of  the  provisions  of  this  contract. 

(2)  Unless  the  Engineer  shall  submit  to  the  Commission  his  written  certificate 
that  all  the  work  to  the  time  in  question  has,  in  his  opinion,  been  done  in  the  manner 
provided  in  the  contract,  and  to  his  satisfaction. 

(3)  Unless  the  Contractor  shall  furnish  to  the  Commission,  if  requested,  satis- 
factory evidence  that  any  claim  that  may  be  made  against  the  Commonwealth,  or 
the  Commission,  or  the  Engineer,  or  any  person  or  persons  employed  by  them,  or 
against  the  Contractor  or  any  sub-contractor,  based  upon  any  of  the  claims  men- 
tioned in  clauses  (a),  (c)  and  (g)  of  the  "General  Requirements,"  has  been  satisfied 
by  the  Contractor. 

(4)  If  the  Commonwealth  or  the  Commission  be  restrained  by  legal  process 
from  making  such  payments. 


ADDITIONAL   CONTRACT  FORMS  17—21 

And  provided,  further,  that  the  Commonwealth  or  the  Commission  may  retain 
any  moneys  which  would  otherwise  be  payable  at  any  time  hereunder  and  apply 
the  same,  or  so  much  as  may  be  necessary  therefor,  to  the  payment  of  any  expense, 
losses  or  damages  incurred  by  the  Commonwealth  or  the  Commission  and  deter- 
mined as  herein  provided,  and  may  retain,  until  all  claims  are  settled,  so  much  of 
such  moneys  as  the  Commission  shall  be  of  opinion  will  be  required  to  settle  all 
claims  against  the  Commonwealth,  the  Commission,  the  Engineer  and  their  officers 
and  agents  specified  in  clauses  (a),  (c)  and  (g)  of  the  "General  Requirements,"  and 
all  claims  which  have  been  filed  in  the  office  of  the  Commission  for  labor  on  and 
for  materials  used  in  the  work ;  or  the  Commission  may  make  such  settlements  and 
apply  thereto  any  moneys  retained  under  this  contract.  If  the  moneys  retained 
under  this  contract  are  insufficient  to  pay  the  sums  found  by  the  Commission  to  be 
due  under  the  claims  for  labor  and  materials,  the  Commonwealth  or  the  Commission 
may  at  its  discretion  pay  the  same,  and  the  Contractor  shall  repay  to  the  Common- 
wealth or  the  Commission  all  sums  so  paid  out. 

The  following  provision  contains  little  that  has  not  been  shown  previ- 
ously, but  the  grouping  is  different,  and  it  seems  desirable  to  include  it  in 
this  form : 

76.  The  Contractor  shall  do  all  the  work  and  furnish  all  the  materials,  tools 
and  appliances,  except  as  herein  otherwise  specified,  necessary  or  proper  for  per- 
forming and  completing  the  work  required  by  this  contract,  in  the  manner  and 
within  the  time  hereinafter  specified.  He  shall  furnish,  erect,  maintain  and  remove 
the  construction  plant  and  such  temporary  works  as  may  be  required.  If  at  any 
time  before  the  commencement  or  during  the  progresss  of  the  work  of  any  part  of  it, 
the  Contractor's  methods  or  appliances  appear  to  the  Director  to  be  unsafe,  in- 
efficient or  inadequate  for  securing  the  safety  of  the  workmen,  the  quality  of  work 
or  the  progress  required,  he  may  order  the  Contractor  to  increase  their  safety  and 
efficiency  or  to  improve  their  character,  and  the  Contractor  shall  comply  with  such 
orders ;  but  the  failure  of  the  Director  to  make  such  demand  shall  not  relieve  the 
Contractor  of  his  obligation  to  secure  the  safe  conduct,  the  quality  of  work  and  the 
progress  required  by  the  contract,  and  the  Contractor  alone  shall  be  responsible  for 
the  safety,1  efficiency  and  adequacy  of  his  plant,  appliances  and  methods.  All  the 
work,  labor  and  materials  to  be  done  and  furnished  under  this  contract  shall  be 
done  and  furnished  strictly  pursuant  to,  and  in  conformity  with  the  attached 
Specifications,  and  the  lines  and  grades  and  other  directions  of  the  Director  as  given 
from  time  to  time  during  the  progress  of  the  work  under  the  terms  of  this  contract, 
and  also  in  accordance  with  the  contract  drawings,  and  with  working  drawings  to  be 
furnished  from  time  to  time.  The  Contractor  shall  complete  the  entire  work  to 
the  satisfaction  of  the  Director,  and  in  accordance  with  the  specifications  and  draw- 
ings herein  mentioned,  and  at  the  prices  herein  agreed  upon  and  fixed  therefor. 

The  date  for  said  completion  shall  be  on  or  before 19. ., 

the  time  expressly  stated  by  the  Contractor  in  his  proposal  or  bid  as  the  date  upon 
which  he  agrees  to  complete  the  contract  items  herein  bid  upon. 

Where  an  acknowledgment  is  taken  of  the  signatures  of  the  parties 
to  the  contract,  the  following  forms  are  sometimes  used,  and  are  reasonable 
and  proper  forms : 


17—22  ADDITIONAL   CONTRACT  FORMS 

77.  State  of \ 

County  of j88 

On  this day  of 19. .,  before  me 

personally  came 

to  me  known  and  known  to  me  to  be  the  same  person  described  in  and  who  executed 
the  foregoing  instrument,  and  he  acknowledged  to  me  that  he  executed  the  same 
for  the  purposes  therein  mentioned. 


.Title. 


A.  State  of \ 

County  of J88 

On  this day  of 19. ., 

before  me  personally  came 

to  me  personally  known  and  known  to  me  to  be  a  member  of  the  firm  of 

and  the  person  described  in  and  who  executed  the  foregoing  instrument  in  behalf  of 
said  firm,  and  he  acknowledged  to  me  that  he  executed  the  same  in  behalf  of,  and  as 
the  act  of  said  firm  for  the  purposes  therein  mentioned. 


.Title. 


B.  State  of \ 

County  of J88' 

On  this day  of 19 . .,  before 

me  personally  came 

to  me  personally  known  and  known  to  me  to  be  the 

of  the 

the  corporation  described  in  and  which  executed  the  foregoing  instrument  and 

to  me  personally  known  and  known  to  me  to  be  the 

of  said  corporation,  who  being  by  me  severally  duly  sworn  did  say,  each  for  himself, 
as  follows : 

The  said 

resides  at 

and  is  such 

and  the  said 

resides  at 

and  is  such 

I  know  the  corporate  seal  of  said  corporation ;  the  seal  affixed  to  the  foregoing 
instrument  is  such  corporate  seal  and  it  was  so  affixed  by  order  of  the  Board  of 
Directors  of  said  corporation,  and  by  the  like  order  I  signed  thereto  my  name  and 
official  designation. 


.Title. 


The  following  is  a  fine  example  of  a  draft  for  a  cost  plus  percentage 
scheme  of  work.  Some  of  the  provisions  have  special  interest  in  connec- 
tion with  extra  work,  as  well  as  with  suspension  or  annulment. 


ADDITIONAL  CONTRACT  FORMS  17-23 

78.  CONTRACT  FOR  EMERGENCY  WORK 

CONSTRUCTION  OF 

CONTRACT  made  and  concluded  this day  of 

19 . . ,  by  and  between 

a  corporation  organized  under  the  laws  of  the  State  of 

represented  by its  President, 

party  of  the  first  part  (hereinafter  called  Contractor)  and  the 

UNITED  STATES  OF  AMERICA 

By  Major  W.  A.  Dempsey,  Q.  M.  U.  S.  R.  (hereinafter  called  Contracting  Officer) 
acting  by  authority  of  the  Secretary  of  War,  party  of  the  second  part. 

WHEREAS,  the  Congress  having  declared  by  Joint  Resolution  approved 
April  6,  1917,  that  war  exists  between  the  United  States  of  America  and  Germany, 
a  national  emergency  exists  and  the  United  States  urgently  requires  the  immediate 
performance  of  the  work  hereinafter  described,  and  it  is  necessary  that  said  work 
shall  be  completed  within  the  shortest  possible  time ;  and 

WHEREAS,  it  is  advisable  under  the  disturbed  conditions  which  exist  in  the 
contracting  industry  throughout  the  country  for  the  United  States  to  depart  from 
the  usual  procedure  in  the  matter  of  letting  contracts,  and  adopt  means  that  will 
insure  the  most  expeditious  results ;  and 

WHEREAS,  the  Contractor  has  had  experience  in  the  execution  of  similar 
work,  has  an  organization  suitable  for  the  performance  of  such  work,  and  is  ready 
to  undertake  the  same  upon  the  terms  and  conditions  herein  provided ; 

NOW,  THEREFORE,  THIS  CONTRACT  WITNESSETH,  That  in  con- 
sideration of  the  premises  and  of  the  payments  to  be  made  as  hereinafter  provided, 
the  Contractor  hereby  covenants  and  agrees  to  and  with  the  Contracting  Officer 
as  follows : 

ARTICLE  I 

EXTENT  OF  THE  WORK.  The  Contractor  shall,  in  the  shortest  possible 
time,  furnish  the  labor,  material,  tools,  machinery,  equipment,  facilities,  and  sup- 
plies, and  do  all  things  necessary  for  the  construction  and  completion  of  the  follow- 
ing work : 

(Here  follows  a  statement  of  the  work  to  be  performed.) 

in  accordance  with  the  drawings  and  specifications  to  be  furnished  by  the  Con- 
tracting Officer,  and  subject  in  every  detail  to  his  supervision,  direction  and  instruc- 
tion. 

The  Contracting  Officer  may,  from  time  to  time,  by  written  instructions  or 
drawings  issued  to  the  Contractor,  make  changes  in  said  drawings  and  specifications, 
issue  additional  instructions,  require  additional  work,  or  direct  the  omission  of 
work  previously  ordered,  and  the  provisions  of  this  contract  shall  apply  to  all  such 
changes,  modifications  and  additions  with  the  same  effect  as  if  they  were  embodied 
in  the  original  drawings  and  specifications.  The  Contractor  shall  comply  with  all 
such  written  instructions  or  drawings. 

The  title  to  all  work  completed  or  in  course  of  construction  shall  be  in  the 
United  States ;  and  upon  delivery  at  the  site  of  the  work,  and  upon  inspection  and 


17-24  ADDITIONAL   CONTRACT  FORMS 

acceptance  in  writing  by  the  Contracting  Officer,  all  machinery,  equipment,  hand 
tools,  supplies,  and  materials,  for  which  the  Contractor  shall  be  entitled  to  be  reim- 
bursed under  paragraph  (a)  of  Article  II  hereof,  shall  become  the  property  of  the 
United  States.  These  provisions  as  to  title  shall  not  operate  to  relieve  the  Con- 
tractor from  any  duties  imposed  hereby  or  by  the  Contracting  Officer. 


ARTICLE  II 

COST  OF  THE  WORK.  The  Contractor  shall  be  reimbursed  in  the  manner 
hereinafter  described  for  such  of  its  actual  net  expenditures  in  the  performance  of 
said  work  as  may  be  approved  or  ratified  by  the  Contracting  Officer  and  as  are 
included  in  the  following  items : 

(a)  All  labor,  material,  machinery,  hand  tools  not  owned  by  the  workmen, 
supplies  and  equipment,  necessary  for  either  temporary  or  permanent  use  for  the 
benefit  of  said  work ;  but  this  shall  not  be  construed  to  cover  machinery  or  equip- 
ment in  section  (c)  of  this  Article.     The  Contractor  shall  make  no  departure  from 
the  standard  rate  of  wages  being  paid  in  the  locality  where  said  work  is  being  done, 
without  the  prior  consent  and  approval  of  the  Contracting  Officer. 

(b)  All  sub-contracts  made  in  accordance  with  the  provisions  of  this  agreement. 

(c)  Rental  actually  paid  by  the  Contractor,  at  rates  not  to  exceed  those  men- 
tioned in  the  schedule  of  rental  rates  hereto  attached,  for  construction  plant  in 
sound  and  workable  condition,  such  as  pumps,  derricks,  concrete  mixers,  boilers, 
clam-shell  or  other  buckets,  electric  motors,  electric  drills,  electric  hammers,  electric 
hoists,  steam  shovels,  locomotive  cranes,  power  saws,  engineers'  levels  and  transits, 
and  such  other  equipment  as  may  be  necessary  for  the  proper  and  economical 
prosecution  of  the  work. 

Rental  to  the  Contractor  for  such  construction  plant  or  parts  thereof  as  it  may 
own  and  furnish,  at  the  rates  mentioned  in  the  schedule  of  rental  rates  hereto 
attached,  except  as  hereinafter  set  forth.  When  such  construction  plant  or  any 
part  thereof  shall  arrive  at  the  site  of  the  work,  the  Contractor  shall  file  with  the 
Contracting  Officer  a  schedule  setting  forth  the  fair  valuation  at  that  time  of  each 
part  of  such  construction  plant.  Such  valuation  shall  be  deemed  final,  unless  the 
Contracting  Officer  shall,  within  five  days  after  the  machinery  has  been  set  up  and 
is  working,  modify  or  change  such  valuation,  in  which  event  the  valuation  so  made 
by  the  Contracting  Officer  shall  be  deemed  final.  When  and  if  the  total  rental  paid 
to  the  Contractor  for  any  such  part  shall  equal  the  valuation  thereof,  no  further 
rental  therefor  shall  be  paid  to  the  Contractor  and  title  thereto  shall  vest  in  the 
United  States.  At  the  completion  of  the  work,  the  Constructing  Officer  may  at  his 
option  purchase  for  the  United  States  any  part  of  such  construction  plant  then 
owned  by  the  Contractor  by  paying  to  the  Contractor  the  difference  between  the 
valuation  of  such  part  or  parts  and  the  total  rentals  theretofore  paid  therefor. 

Rates  of  rental  as  substitutes  for  such  scheduled  rental  rates  may  be  agreed 
upon  in  writing  between  the  Contractor  and  the  Contracting  Officer,  such  rates 
to  be  in  conformity  with  rates  of  rental  charged  in  the  particular  territory  in  which 
the  work  covered  by  this  contract  is  to  be  performed.  If  the  Contracting  Officer 
shall  furnish  or  supply  any  such  equipment,  the  Contractor  shall  not  be  allowed 
any  rental  therefor  and  shall  receive  no  fee  for  the  use  of  such  equipment. 

(d)  Loading  and  unloading  such  construction  plant,  the  transportation  thereof 
to  and  from  the  place  or  places  where  it  is  to  be  used  in  connection  with  said  work 


ADDITIONAL   CONTRACT  FORMS  17—25 

subject  to  the  provisions  hereinafter  set  forth,  the  installation  and  dismantling 
thereof,  and  ordinary  repairs  and  replacements  during  its  use  in  the  said  work. 

(e)  Transportation  and  expenses  to  and  from  the  work  of  the  necessary  field 
forces  for  the  economical  and  successful  prosecution  of  the  work,  procuring  labor  and 
expediting  the  production  and  transportation  of  material  and  equipment. 

(f)  Salaries  of  resident  engineers,  superintendents,  timekeepers,  foremen,  and 
other  employees  at  the  field  offices  of  the  Contractor  in  connection  with  said  work. 
In  case  the  full  time  of  any  field  employee  of  the  Contractor  is  not  applied  to  said 
work  but  is  divided  between  said  work  and  other  work,  his  salary  shall  be  included 
in  this  item  only  in  proportion  to  the  actual  time  applied  to  this  work. 

(g)  Buildings  and  equipment  required  for  necessary  field  offices,  commissary 
and  hospital  and  the  cost  of  maintaining  and  operating  said  offices,  commissary  and 
hospital,  including  such  minor  expenses  as  telegrams,  telephone  service,  expressage, 
postage,  etc. 

(h)  Such  bonds,  fire,  liability  and  other  insurance  as  the  Contracting  Officer 
may  approve  or  require ;  and  such  losses  and  expenses,  not  compensated  by  insur- 
ance or  otherwise,  as  are  found  and  certified  by  the  Contracting  Officer  to  have  been 
actually  sustained  (including  settlements  made  with  the  written  consent  and  ap- 
proval of  the  Contracting  Officer)  by  the  Contractor  in  connection  with  said  work, 
and  to  have  clearly  resulted  from  causes  other  than  the  fault  or  neglect  of  the  Con- 
tractor. Such  losses  and  expenses  shall  not  be  included  in  the  cost  of  the  work  for 
the  purpose  of  determining  the  Contractor's  fee.  The  cost  of  reconstructing  and 
replacing  any  of  the  work  destroyed  or  damaged  shall  be  included  in  the  cost  of  the 
work  for  the  purpose  of  reimbursement  to  the  Contractor,  but  not  for  the  purpose 
of  determining  the  Contractor's  fee,  except  as  hereinafter  provided. 

(i)  Permit  fees,  deposits,  royalties,  and  other  similar  items  of  expense  incidental 
to  the  execution  of  this  contract,  and  necessarily  incurred.  Expenditures  under 
this  item  must  be  approved  in  advance  by  the  Contracting  Officer. 

(j)  Such  proportion  of  the  transportation,  traveling  and  hotel  expenses  of 
officers,  engineers  and  other  employees  of  the  Contractor  as  is  actually  incurred  in 
connection  with  this  work. 

(k)  Suchi  other  items  as  should  in  the  opinion  of  the  Contracting  Officer  be 
included  in  the  cost  of  the  work.  When  such  an  item  is  allowed  by  the  Contracting 
Officer,  it  shall  be  specifically  certified  as  being  allowed  under  this  paragraph. 

The  United  States  reserves  the  right  to  pay  directly  to  common  carriers  any 
or  all  freight  charges  on  material  of  all  kinds,  and  machinery,  furnished  under  this 
contract,  and  certified  by  the  Contracting  Officer  as  being  for  installation  or  for 
consumption  in  the  course  of  the  work  hereunder ;  the  Contractor  shall  be  reim- 
bursed for  such  freight  charges  of  this  character  as  it  shall  pay  and  as  shall  be 
specifically  certified  by  the  Contracting  Officer ;  but  the  Contractor  shall  have  no 
fee  based  on  such  expenditures.  Freight  charges  paid  by  the  Contractor  for  trans- 
portation of  construction  equipment,  construction  plant,  tools  and  supplies  of 
every  character,  shall  be  treated  as  part  of  the  cost  of  the  work  upon  which  the 
Contractor's  fee  shall  be  based;  provided  that  charges  for  transportation  of 
such  construction  equipment,  construction  plant  and  tools  over  distances  in  ex- 
cess of  five  hundred  miles  shall  require  the  special  approval  of  the  Contracting 
Officer. 

No  salaries  of  the  Contractor's  Executive  Officers,  no  part  of  the  expense  in- 
curred in  conducting  the  Contractor's  main  office,  or  regularly  established  branch 
office,  and  no  overhead  expenses  of  any  kind,  except  as  specifically  listed  above, 


17-26  ADDITIONAL  CONTRACT   FORMS 

shall  be  included  in  the  cost  of  the  work ;  nor  shall  any  interest  on  capital  employed 
or  on  borrowed  money  be  included  in  the  cost  of  the  work. 

The  Contractor  shall  take  advantage  to  the  extent  of  its  ability  of  all  discounts 
available,  and  when  unable  to  take  such  advantage  shall  promptly  notify  the  Con- 
tracting Officer  of  its  inability  and  its  reasons  therefor. 

All  revenue  from  the  operations  of  the  commissary,  hospital  or  other  facilities 
or  from  rebates,  refunds,  etc.,  shall  be  accounted  for  by  the  Contractor  and  applied 
in  reduction  of  the  cost  of  the  work. 

ARTICLE  HI 

DETERMINATION  OF  FEE.  As  full  compensation  for  the  services  of 
the  Contractor,  including  profit  and  all  general  overhead  expense,  except  as  herein 
specifically  provided,  the  Contracting  Officer  shall  pay  to  the  Contractor  in  the 
manner  hereinafter  prescribed  a  fee  to  be  determined  at  the  time  of  completion  of 
the  work  from  the  following  schedule,  except  as  hereinafter  otherwise  provided : 

If  the  cost  of  the  work  is  under  $100,000.00  a  fee  of  ten  per  cent  (10%)  of  such 
cost. 

If  the  cost  of  the  work  is  over  $100,000.00  and  under  $125,000.00  a  fee  $10,000.00. 

If  the  cost  of  the  work  is  over  $125,000.00  and  under  $250,000.00  a  fee  of  eight 
per  cent  (8%)  of  such  cost. 

If  the  cost  of  the  work  is  over  $250,000.00  and  under  $266,666.67  a  fee  of 
$20,000.00. 

If  the  cost  of  the  work  is  over  $266,666.67  and  under  $500,000.00  a  fee  of  seven 
and  one-half  per  cent  (7^  %)  of  such  cost. 

If  the  cost  of  the  work  is  over  $500,000.00  and  under  $535,714.29  a  fee  of 
$37,500.00. 

If  the  cost  of  the  work  is  over  $535,714.29  and  under  $3,000,000.00  a  fee  of  seven 
per  cent  (7%)  of  such  cost. 

If  the  cost  of  the  work  is  over  $3,000,000.00  and  under  $3,500,000.00  a  fee  of 
$210,000.00. 

If  the  cost  of  the  work  is  over  $3,500,000.00  a  fee  of  six  per  cent  (6%)  of  such 
cost. 

Provided,  however,  that  the  fee  upon  such  part  of  the  cost  of  the  work  as  is 
represented  by  payments  to  sub-contractors,  under  subdivision  (b)  above,  shall  in 
each  of  the  above  contingencies  be  five  per  cent  (5%)  and  no  more  of  the  amount 
of  such  part  of  the  cost. 

The  cost  of  materials  purchased  or  furnished  by  the  Contracting  Officer  for 
said  work,  exclusive  of  all  freight  charges  thereon,  shall  be  included  in  the  cost  of 
the  work  for  the  purpose  of  reckoning  such  fee  to  the  Contractor,  but  for  no  other 
purpose. 

The  fee  for  reconstructing  and  replacing  any  of  the  work  destroyed  or  damaged 
shall  be  such  percentage  of  the  cost  thereof  —  not  exceeding  seven  per  cent  (7%) 
—  as  the  Contracting  Officer  may  determine. 

The  total  fee  to  the  Contractor  hereunder  shall  in  no  event  exceed  the  sum  of 
$250,000.00,  anything  in  this  agreement  to  the  contrary  notwithstanding. 

ARTICLE  IV 

PAYMENTS.  On  or  about  the  seventh  day  of  each  month  the  Contracting 
Officer  and  the  Contractor  shall  prepare  a  statement  showing  as  completely  as 


ADDITIONAL   CONTRACT  FORMS  17-27 

possible  :  (1)  the  cost  of  the  work  up  to  and  including  the  last  day  of  the  previous 
month,  (2)  the  cost  of  the  materials  furnished  by  the  Contracting  Officer  up  to  and 
including  such  last  day,  and  (3)  an  amount  equal  to  three  and  one-half  per  cent 
(3^%),  except  as  herein  otherwise  provided,  of  the  sum  of  (1)  and  (2)  on  account  of 
the  Contractor's  fee;  and  the  Contractor  at  such  time  shall  deliver  to  the  Con- 
tracting Officer  original  signed  pay-rolls  for  labor,  original  invoices  for  materials 
purchased  and  all  other  original  papers  not  theretofore  delivered  supporting  ex- 
penditures claimed  by  the  Contractor  to  be  included  in  the  cost  of  the  work.  If 
there  be  any  item  or  items  entering  into  such  statement  upon  which  the  Contractor 
and  the  Contracting  Officer  cannot  agree,  the  decision  of  the  Contracting  Officer 
as  to  such  disputed  item  or  items  shall  govern.  The  Contracting  Officer  shall  then 
pay  to  the  Contractor  on  or  about  the  ninth  day  of  each  month  the  cost  of  the  work 
mentioned  in  (1)  and  the  fee  mentioned  in  (3)  of  such  statement,  less  all  previous 
payments.  When  the  statement  above  mentioned  includes  any  work  of  reconstruct- 
ing and  replacing  work  destroyed  or  damaged,  the  payment  on  account  of  the  fee 
in  (3)  for  such  reconstruction  and  replacement  work  shall  be  computed  at  such  rate, 
not  exceeding  three  and  one-half  per  cent  (3^%),  as  the  Contracting  Officer  may 
determine.  The  statement  so  made  and  all  payments  made  thereon  shall  be  final 
and  binding  upon  both  parties  hereto,  except  as  provided  in  Article  XIV  hereof. 
The  Contracting  Officer  may  also  make  payments  at  more  frequent  intervals  for 
the  purpose  of  enabling  the  Contractor  to  take  advantage  of  discounts  at  intervals 
between  the  dates  above  mentioned  or  for  other  lawful  purposes.  Upon  final 
completion  of  said  work  the  Contracting  Officer  shall  pay  to  the  Contractor  the 
unpaid  balance  of  the  cost  of  the  work  and  of  the  fee  as  determined  under  Articles 
II  and  III  hereof. 

ARTICLE  V 

INSPECTION  AND  AUDIT.  The  Contracting  Officer  shall  at  all  times  be 
afforded  proper  facilities  for  inspection  of  the  work  and  shall  at  all  times  have  access 
to  the  premises,  to  the  work  and  material,  and  to  all  books,  records,  correspondence, 
instructions,  plans,  drawings,  receipts,  vouchers,  and  memoranda  of  every  descrip- 
tion of  the  Contractor  pertaining  to  said  work ;  and  the  Contractor  shall  preserve 
for  a  period  of  two  years  after  its  completion  or  cessation  of  work  under  this  contract, 
all  the  books,  records  and  other  papers  just  mentioned.  Any  duly  authorized 
representative  of  the  Contractor  shall  be  accorded  the  privilege  of  examining  the 
books,  records,  and  papers  of  the  Contracting  Officer  relating  to  said  work  for  the 
purpose  of  checking  up  and  verifying  the  cost  of  said  work.  The  system  of  account- 
ing to  be  employed  by  the  Contractor  shall  be  such  as  is  satisfactory  to  the  Con- 
tracting Officer. 

If  at  any  time  the  Contracting  Officer  shall  find  that  bills  for  labor,  material, 
or  other  bills  legitimately  incurred  by  the  Contractor  hereunder,  are  not  promptly 
paid  by  the  Contractor,  the  Contracting  Officer  may,  in  his  discretion,  refuse  to 
make  further  payments  to  the  Contractor  until  all  such  obligations  past  due  shall 
have  been  paid.  Should  the  Contractor  neglect  or  refuse  to  pay  such  bills  within 
five  days  after  notice  from  the  Contracting  Officer  so  to  do,  then  the  Contracting 
Officer  shall  have  the  right  to  pay  such  bills  directly,  in  which  event  such  direct 
payments  shall  not  be  included  in  the  cost  of  the  work. 


17-28  ADDITIONAL   CONTRACT  FORMS 


ARTICLE  VI 

SPECIAL  REQUIREMENTS.    The  Contractor  hereby  agrees  that  it  will : 

(a)  Begin  the  work  herein  specified  at  the  earliest  time  practicable,  and  dili- 
gently proceed  so  that  such  work  may  be  completed  at  the  earliest  possible  date. 

(b)  Promptly  pay  for  all  labor,  material  or  other  service  rendered. 

(c)  Procure,  and  thereafter  maintain  such  insurance,  in  such  forms  and  in  such 
amounts,  and  for  such  periods  of  tune  as  the  Contracting  Officer  may  approve  or 
require. 

(d)  Procure  all  necessary  permits  and  licenses,  and  obey  and  abide  by  all  laws, 
regulations,  ordinances,  and  other  rules  applying  to  such  work,  of  the  United  States 
of  America,  of  the  State  or  Territory  wherein  such  work  is  done,  of  any  subdivision 
thereof,  or  of  any  duly  constituted  public  authority. 

(e)  Unless  this  provision  is  waived  by  the  Contracting  Officer,  insert  in  every 
contract  made  by  it  for  the  furnishing  to  it  of  services,  materials,  supplies,  machinery 
and  equipment,  or  the  use  thereof,  for  the  purposes  of  the  work  hereunder,  a  provi- 
sion that  such  contract  is  assignable  to  the  United  States ;  will  make  all  such  con- 
tracts in  its  own  name,  and  will  not  bind  or  purport  to  bind  the  United  States  or  the 
Contracting  Officer  thereunder. 

(f)  In  every  sub-contract  made  in  accordance  with  the  pro  visions  hereof,  require 
the  sub-contractor  to  agree  to  comply  fully  with  all  the  undertakings  and  obligations 
of  the  Contractor  herein,  excepting  such  as  do  not  apply  to  such  sub-contractor's 
work. 

(g)  At  all  times  keep  at  the  site  of  the  work  a  duly  appointed  representative 
who  shall  receive  and  execute  on  the  part  of  the  Contractor  such  notices,  directions 
and  instructions  as  the  Contracting  Officer  may  desire  to  give. 

(h)  At  all  times  use  its  best  efforts  in  all  its  acts  hereunder  to  protect  and  sub- 
serve the  interest  of  the  Contracting  Officer  and  the  United  States. 

ARTICLE  VII 

RIGHT  TO  TERMINATE  CONTRACT.  Should  the  Contractor  at  any 
time  refuse,  neglect,  or  fail  in  any  respect  to  prosecute  the  work  with  promptness 
and  diligence  or  default  in  the  performance  of  any  of  the  agreements  herein  con- 
tained, the  Contracting  Officer  may,  at  his  option,  after  five  days  written  notice  to  the 
Contractor,  terminate  this  contract,  and  may  enter  upon  the  premises  and  take 
possession,  for  the  purpose  of  completing  said  work,  of  all  materials,  tools,  equip- 
ment, and  appliances,  and  all  options,  privileges  and  rights,  and  may  complete,  or 
employ  any  other  person  or  persons  to  complete  said  work.  In  case  of  such  ter- 
mination of  the  contract,  the  Contracting  Officer  shall  pay  to  the  Contractor  such 
amounts  of  money  on  account  of  the  unpaid  balance  of  the  cost  of  the  work  and  of 
the  fee  as  will  result  in  fully  reimbursing  the  Contractor  for  the  cost  of  the  work 
up  to  the  time  of  such  termination,  plus  a  fee  computed  thereon  at  the  rate  or  rates 
for  monthly  payments  set  forth  in  Article  IV  hereof ;  and  the  Contracting  Officer 
shall  also  pay  to  the  Contractor  compensation,  either  by  purchase  or  rental  at  the 
election  of  the  Contracting  Officer,  for  any  equipment  retained ;  such  compensation, 
in  the  event  of  rental,  to  be  in  accordance  with  paragraph  (c)  of  Article  II,  and  in 
the  event  of  purchase  to  be  based  upon  the  valuation  determined  by  the  Contracting 
Officer  as  of  the  time  of  his  taking  such  possession.  The  Contractor  hereby  agrees 


ADDITIONAL   CONTRACT  FORMS  17-29 

that  such  payments  when  made  shall  constitute  full  settlement  of  all  claims  of  the 
Contractor  against  the  Contracting  Officer  and  the  United  States  or  either  of  them 
for  money  claimed  to  be  due  to  the  Contractor  for  any  reason  whatsoever.  In  case 
of  such  termination  of  the  contract  the  Contracting  Officer  shall  further  assume  and 
become  liable  for  all  such  obligations,  commitments,  and  unliquidated  claims  as  the 
Contractor  may  have  theretofore  in  good  faith  undertaken  or  incurred  in  connection 
with  said  work,  and  the  Contractor  shall,  as  a  condition  of  receiving  the  payments 
mentioned  in  this  Article,  execute  and  deliver  all  such  papers,  and  take  all  such 
steps  as  the  Contracting  Officer  may  require  for  the  purpose  of  fully  vesting  in 
him  the  rights  and  benefits  of  the  Contractor  under  such  obligations  or  commit- 
ments. When  the  Contracting  Officer  shall  have  performed  the  duties  incumbent 
upon  him  under  the  provisions  of  this  Article,  the  Contracting  Officer  shall  there- 
after be  entirely  released  and  discharged  of  and  from  any  and  all  demands,  actions, 
or  claims  of  any  kind,  on  the  part  of  the  Contractor  hereunder  or  on  account  hereof. 

ARTICLE  VIII 

ABANDONMENT  OF  WORK  BY  CONTRACTING  OFFICER.  If 
conditions  should  arise  which  in  the  opinion  of  the  Contracting  Officer  make  it 
advisable  or  necessary  to  cease  work  under  this  contract,  the  Contracting  Officer 
may  abandon  the  work  and  terminate  this  contract.  In  such  case  the  Contracting 
Officer  shall  assume  and  become  liable  for  all  such  obligations,  commitments  and 
unliquidated  claims  as  the  Contractor  may  have  theretofore,  in  good  faith,  under- 
taken or  incurred  in  connection  with  said  work;  and  the  Contractor  shall,  as  a 
condition  of  receiving  the  payments  mentioned  in  this  Article,  execute  and  deliver 
all  such  papers,  and  take  all  such  steps  as  the  Contracting  Officer  may  require  for 
the  purpose  of  fully  vesting  in  him  the  rights  and  benefits  of  the  Contractor  under 
such  obligations  or  commitments.  The  Contracting  Officer  shall  pay  to  the  Con- 
tractor such  an  amount  of  money  on  account  of  the  unpaid  balance  of  the  cost  of  the 
work  and  of  the  fee,  as  will  result  in  the  Contractor  receiving  full  reimbursement 
for  the  cost  of  the  work  up  to  the  time  of  such  abandonment,  plus  a  fee  to  be  com- 
puted in  the  following  manner :  To  the  cost  of  the  work  up  to  the  time  of  such 
abandonment  shall  be  added  the  amount  of  the  contractual  obligations  or  commit- 
ments assumed  by  the  Contracting  Officer,  and  such  total  shall  be  treated  as  the 
cost  of  the  work,  upon  which  the  fee  shall  be  computed  in  accordance  with  the 
provisions  of  Article  III  hereof.  When  the  Contracting  Officer  shall  have  performed 
the  duties  incumbent  upon  him  under  the  provisions  of  this  Article,  the  Contracting 
Officer  and  the  United  States  shall  thereafter  be  entirely  released  and  discharged  of 
and  from  any  and  all  demands,  actions  or  claims  of  any  kind  on  the  part  of  the 
Contractor  hereunder  or  on  account  hereof. 


ARTICLE  IX 

BOND.  The  Contractor  shall,  prior  to  commencing  the  said  work,  furnish  a 
bond,  with  sureties  satisfactory  to  the  Contracting  Officer,  in  the  sum  of  Two 
Hundred  Fifty  Thousand  ($250,000.00)  Dollars,  conditioned  upon  its  full  and 
faithful  performance  of  all  the  terms,  conditions  and  provisions  of  this  contract 
and  upon  its  prompt  payment  of  all  bills  for  labor,  material,  or  other  service  fur- 
nished to  the  Contractor. 


17-30  ADDITIONAL   CONTRACT  FORMS 


ARTICLE  X 

CONVICT  LABOR.  No  person  or  persons  shall  be  employed  in  the  per- 
formance of  this  contract  who  are  undergoing  sentence  of  imprisonment  at  hard 
labor  imposed  by  the  courts  of  any  of  the  several  states,  territories,  or  municipalities 
having  criminal  jurisdiction. 

ARTICLE  XI 

HOURS  AND  CONDITIONS  OF  LABOR.  No  laborer  or  mechanic  doing 
any  part  of  the  work  contemplated  by  this  contract,  in  the  employ  of  the  Contractor, 
of  any  sub-contractor  contracting  for  any  part  of  said  work  contemplated,  shall  be 
required  or  permitted  to  work  more  than  eight  (8)  hours  in  any  one  calendar  day 
upon  such  work,  such  prohibition  being  in  accordance  with  the  Act  approved  June 
19,1912,  limiting  the  hours  of  daily  service  of  mechanics  and  laborers  on  work  under 
contracts  to  which  the  United  States  is  a  party.  For  each  violation  of  the  require- 
ments of  this  Article  a  penalty  of  Five  Dollars  ($5.00)  shall  be  imposed  upon  the 
Contractor  for  each  laborer  or  mechanic  for  every  calendar  day  in  which  said  em- 
ployee is  required  or  permitted  to  labor  more  than  eight  (8)  hours  upon  said  work, 
and  all  penalties  thus  imposed  shall  be  withheld  for  the  use  and  benefit  of  the  United 
States ;  Provided,  that  this  paragraph  shall  not  be  enforced  nor  shall  any  penalty 
be  exacted  in  case  such  violation  shall  occur  while  there  is  in  effect  any  valid  Execu- 
tive order  suspending  the  provisions  of  said  Act  approved  June  19,  1912,  or  waiving 
the  provisions  and  stipulations  thereof  with  respect  to  either  this  contract  or  any 
class  of  contracts  in  which  this  contract  shall  be  included,  or  when  the  violation 
shall  be  due  to  any  extraordinary  events  or  conditions  of  manufacture,  or  to  any 
emergency  caused  by  fire,  famine,  or  flood,  by  danger  to  life  or  property,  or  by  other 
extraordinary  events  or  conditions  on  account  of  which,  by  subsequent  Executive 
order,  such  past  violation  shall  have  been  excused. 

In  the  event  of  any  dispute  with  reference  to  wages,  hours,  or  other  conditions 
appertaining  to  said  work,  between  the  Contractor  or  any  sub-contractor  and  labor 
employed  by  him  on  said  work,  the  Contractor  or  subcontractor  shall  immediately 
notify  the  Contracting  Officer  of  the  existence  of  such  dispute  and  the  reasons 
therefor.  The  Contracting  Officer  may,  at  his  option,  instruct  the  Contractor  or 
sub-contractor  involved  in  such  dispute  as  to  the  method  or  steps  which  the  Con- 
tractor or  sub-contractor  should  follow  with  reference  thereto,  and  the  Contractor 
or  sub-contractor  shall  thereupon  comply  with  such  instructions. 


ARTICLE  XII 

RIGHT  TO  TRANSFER  OR  SUBLET.  Neither  this  contract,  nor  any 
interest  therein,  shall  be  assigned  or  transferred.  The  Contractor  shall  not  enter 
into  any  sub-contract  for  any  part  of  the  work  herein  specified  without  the  consent 
and  approval  in  writing  of  the  Contracting  Officer.  In  case  of  such  assignment, 
transfer,  or  sub-letting  without  the  consent  and  approval,  in  writing,  of  the  Con- 
tracting Officer,  the  Contracting  Officer  may  refuse  to  carry  out  this  contract  either 
with  the  transferor  or  transferee,  but  all  rights  of  action  for  any  breach  of  this 
contract  by  the  Contractor  are  reserved  to  the  United  States. 


ADDITIONAL   CONTRACT  FORMS  17-31 


ARTICLE  XIII 

NO  PARTICIPATION  IN  PROFITS  BY  GOVERNMENT  OFFICIALS. 

No  member  of,  or  delegate  to,  Congress,  or  Resident  Commissioners,  nor  any  other 
person  belonging  to  or  employed  in  the  military  service  of  the  United  States,  is  or 
shall  be  admitted  to  any  share  or  part  of  this  contract,  or  to  any  benefit  that  may 
arise  therefrom,  but  this  Article  shall  not  apply  to  this  contract  so  far  as  it  may  be 
within  the  operation  or  exception  of  Section  116  of  the  Act  of  Congress  approved 
March  4,  1909  (35  Stats.,  1109). 

ARTICLE  XIV 

SETTLEMENT  OF  DISPUTES.  This  contract  shall  be  interpreted  as  a 
whole  and  the  intent  of  the  whole  instrument,  rather  than  the  interpretation  of  any 
special  clause,  shall  govern.  If  any  doubts  or  disputes  shall  arise  as  to  the  meaning 
or  interpretation  of  anything  in  this  contract,  or  if  the  Contractor  shall  consider 
himself  prejudiced  by  any  decision  of  the  Contracting  Officer  made  under  the  provi- 
sions of  Article  IV  hereof,  the  matter  shall  be  referred  to  the  Officer  in  charge  of 
Cantonment  Construction  for  determination.  If,  however,  the  Contractor  shall 
feel  aggrieved  by  the  decision  of  the  Officer  in  charge  of  Cantonment  Construction, 
he  shall  have  the  right  to  submit  the  same  to  the  Secretary  of  War,  whose  decision 
shall  be  final  and  binding  upon  both  parties  hereto. 

ARTICLE  XV 

This  contract  shall  bind  and  inure  to  the  Contractor  and  its  successors. 

It  is  understood  and  agreed  that  wherever  the  words  "Contracting  Officer" 
are  used  herein,  the  same  shall  be  construed  to  include  his  successor  in  office,  any 
other  person  to  whom  the  duties  of  the  Contracting  Officer  may  be  assigned  by  the 
Secretary  of  War  and  any  duly  appointed  representative  of  the  Contracting  Officer. 

WITNESS  the  hands  of  the  parties  hereto  the  day  and  year  first  above  written, 
all  in  triplicate. 

By President. 

UNITED  STATES  OF  AMERICA. 
By. 


Contracting  Officer. 


SCHEDULE  OF  RENTAL  RATES 

(The  rates  mentioned  are  per  day.) 

Automobiles $5.00  Buckets,  Orangepeel,  1  yard 3.50 

Adding  and  Listing  Machines 20  Orangepeel,  less  than  1  yard ....  2.00 

Buckets,  Clamshell 2.00 

Tipple  and  Bottom  Dump 25  Boiler,  and  3  drum  engine 3.50 

Boring  Machine,  Pneumatic 50  and  2  drum  engine 3.00 

Electric 50         and  1  drum  engine 2.50 


17-32 


ADDITIONAL   CONTRACT  FORMS 


SCHEDULE   OF  RENTAL   RATES  (Continued) 


Boiler  only,  30  h.p.  and  smaller . .   1.50 

only,  larger  than  30  h.p 2.00 

Block  Machine,  Concrete 1.50 

Cars,  Skip,  l£  yards 25 

Skip,  3  yards 50 

Steel,  1  yd.  and  smaller 15 

4  yd.  wooden 25 

6  yd.  wooden 25 

12  yd.  wooden 2.00 

1  Hopper,  Radial  Gate 25 

Crushers  only 2.00 

with  elevator  and  screen 3.00 

Conveyor,  gravity,  per  100  feet ...   1.00 
Compressor, 

10  X  10  with  Steam  Engine 2.50 

8X8  Belt  Driven 1.00 

with  Gasoline  Engine  on  Wheels  5.00 

Westinghouse,  9$  inch 1.00 

Cableways,  without  Engine 4.00 

Drill,  Auto  Traction 5.00 

Dump  Wagons 25 

Diving  Outfit  with  Pumps 10.00 

Derricks,  60  feet  to  85  feet 2.00 

30  feet  to  59  feet 1.50 

less  than  30  feet 1.00 

Breast 25 

Circle  Swing 25 

Elevators,  Platform  or  Bucket 25 

with  Bins  for  Concrete 50 

Engines,  Skeleton,  3  drum 2.00 

Skeleton,  2  drum 1.50 

Skeleton,  1  drum 1.00 

Steam,  Horizontal,  11  to  40  h.p.  1.50 

Steam,  Upright,  to  10  h.p 50 

Gasoline  to  8  h.p 50 

2  Drum,  with  Electric  Motor . .  4.00 

Gasoline,  10  h.p 1.00 

Derrick,  Swinging 50 

Hammers,  Riveting 25 

Hod  Elevating  Machine 1.00 

Leveling  Instruments,  Engineers' .     .25 

Locomotive,  36  inch  Gauge 5.00 

Standard  Gauge 10.00 

Mixers,  with  Boiler  Sideloader . . .  4.00 
with  Electric  Motors,  1  yard . . .  4.00 
without  Boiler,  less  than  1  yd 2.00 


Mixers, 
without  Boiler,  1  yd.  and  larger  3.50 

with  Gasoline  Engine 3.00 

Motorcycles 1.00 

Motors,  2  h.p 15 

5  h.p 25 

10  h.p 50 

25  h.p 1.00 

50  h.p 2.00 

Pumps,  Centrifugal,  10  inch,  Belt 

Driven 3.00 

Centrifugal,  10  inch  with  Motor 

Attached 4.00 

Centrifugal,  8  inch  Steam  Con- 
nected    2.00 

Centrifugal,  6  inch,  Steam  Con- 
nected     1.50 

Centrifugal,  4  inch,  Steam  Con- 
nected     1.00 

Duplex  and  Triplex  to  3  inch 50 

Pulsometer  to  4  inch 1.55 

Diaphragm 20 

Diaphragm,  with  Gas  Engine ...   1.05 

Triplex,  with  Belt  Drive 20 

Pile  Drivers,  Drop 1.50 

Drop,  with  Single  Drum  Engine 

and  Boiler 3.50 

Pile  Hammers, 

Steam,  up  to  2500  Ibs 3.00 

Steam,  larger  than  2500  Ibs.  . . .  5.00 

Rail,  per  ton 06 

Roller,  Horse 1.00 

Steam  Drills 1.00 

Small  Air  Drills 50 

Steam  Roller 8.00 

Steam  Shovel 30.00 

Sprinkling  Cart 1.00 

Saw  Benches 25 

with  Motor  or  Gasoline  Engine    .50 

Scale  Boxes 25 

Scraper,  Wheel 50 

Transits 50 

Typewriter 10 

Fuel  and  Lubricants  not  included  in 
these  prices. 


ADDITIONAL  CONTRACT  FORMS  17-33 

79.  The  Form  of  Agreement  and  the  General  Conditions  of  the  Standard 
Contract  Form  of  the  American  Institute  of  Architects  are  shown  below 
by  permission,  and  are  presented  without  analytical  comment.  They  are 
exceptionally  well  prepared  and  valuable  documents. 

NOTE.  —  This  Form  of  Agreement  is  approved  by  the  American  Institute  of 
Architects  when  used  with  the  General  Conditions  of  the  Contract 
issued  by  the  Institute. 

THE  STANDARD  FORM  OF  AGREEMENT  BETWEEN  CONTRACTOR 

AND  OWNER 

ISSUED   BY  THE  AMERICAN  INSTITUTE  OF  ARCHITECTS 

This  form  has  been  approved  by  the  National  Association  of  Builders'  Exchanges,  the 
National  Association  of  Master  Plumbers,  the  National  Association  of  Master  Steam  and 
Hot  Water  Fitters,  the  National  Association  of  Sheet  Metal  Contractors  of  the  United  States, 
the'  National  Electrical  Contractors'  Association  of  the  United  States,  and  the  National 
Association  of  Marble  Dealers. 

SECOND  EDITION,  COPYRIGHT  1915  BY  THE  AMERICAN  INSTITUTE  OF  ARCHITECTS,  THE  OCTAGON, 
WASHINGTON,  D.C.  THIS  FORM  is  TO  BE  USED  ONLY  WITH  THE  STANDARD  GENERAL 
CONDITIONS  OF  THE  CONTRACT. 

THIS  AGREEMENT  made  the 

day  of in  the  year  Nineteen  Hundred  and 

by  and  between 

hereinafter  called  the  Contractor,  and 

hereinafter  called  the  Owner, 

WITNESSETH,  that  the  Contractor  and  the  Owner  for  the  considerations  here- 
inafter named  agree  as  follows : 

Article  1.  The  Contractor  agrees  to  provide  all  the  materials  and  to  perform  all 
the  work  shown  on  the  Drawings  and  described  in  the  Specifications  entitled 

(Here  insert  the  caption  descriptive  of  the  work  as  used  in  the  Proposal,  General  Conditions, 
Specifications,  and  upon  the  Drawings.') 

prepared  by 

acting  as,  and  in  these  Contract  Documents  entitled  the  Architect,  and  to  do 
everything  required  by  the  General  Conditions  of  the  Contract,  the  Specifications 
and  the  Drawings. 

Article  2.  The  Contractor  agrees  that  the  work  under  this  Contract  shall  be 
substantially  completed 

(Here  insert  the  date  or  dates  of  completion,  and  stipulations  as  to  liquidated  damages,  if  any.) 

Article  3.    The  Owner  agrees  to  pay  the  Contractor  in  current  funds  for  the 

performance  of  the  Contract ($ )  subject 

to  additions  and  deductions  as  provided  in  the  General  Conditions  of  the  Contract 
and  to  make  payments  on  account  thereof  as  provided  therein,  as  follows  : 

(Here  insert  provisions  as  to  the  method  and  times  of  payments.) 

Article  4.  The  Contractor  and  the  Owner  agree  that  the  General  Conditions  of 
the  Contract,  the  Specifications  and  the  Drawings,  together  with  this  Agreement, 
form  the  Contract,  and  that  they  are  as  fully  a  part  of  the  Contract  as  if  hereto 


17-34 


ADDITIONAL  CONTRACT  FORMS 


attached  or  herein  repeated ;   and  that  the  following  is  an  exact  enumeration  of 
the  Specifications  and  Drawings  : 

The  Contractor  and  the  Owner  for  themselves,  their  successors,  executors, 
administrators  and  assigns,  hereby  agree  to  the  full  performance  of  the  covenants 
herein  contained. 

IN  WITNESS  WHEREOF  they  have  hereunto  set  their  hands  and  seals,  the 
day  and  year  first  above  written. 
In  Presence  of 


as  to  (SEAL) 

as    to (SEAL) 


THE   GENERAL   CONDITIONS   OF   THE   CONTRACT 

STANDARD   FORM   OF  THE  AMERICAN  INSTITUTE  OF  ARCHITECTS 

This  form  has  been  approved  by  the  National  Association  of  Builders'  Exchanges,  the 
National  Association  of  Master  Plumbers,  the  National  Association  of  Master  Steam  and  Hot 
Water  Fitters,  the  National  Association  of  Sheet  Metal  Contractors  of  the  United  States,  the 
National  Electrical  Contractors'  Association  of  the  United  States,  and  the  National  Associa- 
tion of  Marble  Dealers. 

SECOND  EDITION,  COPYRIGHT  1915,  BY  THE  AMERICAN  INSTITUTE  OF  ARCHITECTS,  THE  OCTA- 
GON, WASHINGTON,  D.  C. 

Index  to  the  Articles  of  the  General  Conditions 


1.  Definitions. 

2.  Documents. 

3.  Details  and  Instructions. 

4.  Copies  Furnished. 

5.  Shop  Drawings. 

6.  Drawings  on  the  Work. 

7.  Ownership  of  Drawings. 

8.  Samples. 

9.  The  Architect's  Status. 

10.  The  Architect's  Decisions. 

11.  Foreman,  Supervision. 

12.  Materials,  Labor,   Appli- 

ances. 

13.  Inspection  of  Work. 

14.  Correction    before  Final 

Payment. 

15.  Deductions    for    Uncor- 

rected  Work. 

16.  Correction     after    Final 

Payment. 


17.  Protection  of  Work  and 

Property. 

18.  Emergencies. 

19.  Damage  to  Persons. 

20.  Liability  Insurance. 

21.  Fire  Insurance. 

22.  Guaranty  Bonds. 

23.  Cash  Allowances. 

24.  Changes  in  the  Work. 

25.  Claims  for  Extras. 

26.  Applications     for     Pay- 

ments. 

27.  Certificates     and     Pay- 

ments. 

28.  Payments  Withheld. 

29.  Liens. 

30.  Permits  and  Regulations. 

31.  Royalties  and  Patents. 

32.  Use  of  Premises. 

33.  Cleaning  up. 


34.  Cutting,    Patching    and 

Digging. 

35.  Delays. 

36.  Owner's    Right    to    Do 

Work. 

37.  Owner's    Right    to    Ter- 

minate Contract. 

38.  Contractor's     Right     to 

Stop  Work  or  Termi- 
nate Contract. 

39.  Damages. 

40.  Mutual  Responsibility  of 

Contractors. 

41.  Separate  Contracts. 

42.  Assignment. 

43.  Subcontracts. 

44.  Relations   of   Contractor 

and  Subcontractor. 

45.  Arbitration. 


Article  1.    Principles  and  Definitions.  — 

(a)  The  Contract  Documents  consist  of  the  Agreement,  the  General  Conditions  of 
the  Contract,  the  Drawings  and  Specifications.    These  form  the  Contract. 


ADDITIONAL   CONTRACT  FORMS  17-35 

(b)  The  Owner,  the  Contractor  and  the  Architect  are  those  named  as  such  in  the 

Agreement.  They  are  treated  throughout  the  Contract  Documents  as  if 
each  were  of  the  singular  number  and  masculine  gender. 

(c)  The  Contractor  shall,  as  in  Article  43,  be  responsible  to  the  Owner  for  the  acts 

and  omissions  of  his  subcontractors  and  of  all  persons  directly  or  indirectly 
employed  by  him  or  them  in  connection  with  the  work. 

(d)  The  term  Subcontractor  includes  only  those  having  a  direct  contract  with  the 

Contractor  and  it  includes  one  who  furnishes  material  even  though  he  does 
no  work. 

(e)  The  term  "  person  "  or  "  anyone  "  as  employed  herein  shall  be  taken  to  include 

a  firm  or  corporation. 

(f)  Written  notice  shall  be  deemed  to  have  been  duly  served  if  delivered  in  person 

to  the  individual  or  to  a  member  of  the  firm  or  to  an  officer  of  the  corporation 
for  whom  it  is  intended,  or  if  delivered  at  or  mailed  to  the  last  business  address 
known  to  him  who  gives  the  notice. 

(g)  The  term  "  work  "  of  the  Contractor  or  Subcontractor  includes  labor  or  mate- 

rials or  both, 
(h)  When  the  words  "  approved,"  "  satisfactory,"  "  equal  to,"  "  proper,"  "  as 

directed,"  etc.,  are  used,  approval,  etc.,  by  the  Architect  is  understood, 
(j)   All  time  limits  stated  in  the  Contract  Documents  are  of  the  essence  of  the  contract, 
(k)  The  law  of  the  place  of  building  shall  govern  the  construction  of  this  contract. 

Art.  2.  Execution,  Correlation  and  Intent  of  Documents.  —  The  Contract 
Documents  shall  be  signed  in  duplicate  by  the  Owner  and  Contractor.  In  case  of 
failure  to  sign  the  General  Conditions,  Drawings  or  Specifications  the  Architect 
shall  identify  them.  Even  though  the  signatures  of  the  Owner  and  the  Contractor 
may  have  been  attested  by  witnesses  they  may  be  proved  by  any  competent  evidence. 

The  Contract  Documents  are  complementary,  and  what  is  called  for  by  any 
one  shall  be  as  binding  as  if  called  for  by  all.  The  intention  of  the  documents  is  to 
include  all  labor  and  materials  reasonably  necessary  for  the  proper  execution  of  the 
work.  It  is  not  intended,  however,  that  materials  or  work  not  covered  by  or  prop- 
erly inferable  from  any  heading,  branch,  class  or  trade  of  the  Specifications  shall  be 
supplied  unless  distinctly  so  noted  on  the  drawings.  Materials  or  work  described  in 
words  which  so  applied  have  a  well-known  technical  or  trade  meaning  shall  be  held 
to  refer  to  such  recognized  standards. 

Art.  3.  Detail  Drawings  and  Instructions.  —  The  Architect  shall  furnish,  with 
reasonable  promptness,  additional  instructions,  by  means  of  drawings  or  otherwise, 
necessary  for  the  proper  execution  of  the  work.  All  such  drawings  and  instructions 
shall  be  consistent  with  the  Contract  Documents,  true  developments  thereof,  and 
reasonably  inferable  therefrom.  The  work  shall  be  executed  in  conformity  there- 
with and  the  Contractor  shall  do  no  work  without  proper  drawings  and  instructions. 

The  Contractor  and  the  Architect,  if  either  so  requests,  shall  jointly  prepare  a 
schedule,  subject  to  change  from  time  to  time  in  accordance  with  the  progress  of  the 
work,  fixing  the  latest  dates  at  which  the  various  detail  drawings  will  be  required, 
and  the  Architect  shall  furnish  them  in  accordance  with  that  schedule.  Under  like 
conditions,  a  schedule  shall  be  prepared,  fixing  dates  for  the  submission  of  shop 
drawings,  for  the  beginning  of  manufacture  and  installation  of  materials  and  for 
the  completion  of  the  various  parts  of  the  work. 

Art.  4.  Copies  Furnished.  —  Unless  otherwise  provided  in  the  Contract  Docu- 
ments the  Architect  will  furnish  to  the  Contractor,  free  of  charge,  all  copies  of 
drawings  and  specifications  reasonably  necessary  for  the  execution  of  the  work. 


17-36  ADDITIONAL   CONTRACT   FORMS 

Art.  5.  Shop  Drawings.  —  The  Contractor  shall  submit  two  copies  of  all  shop 
or  setting  drawings  and  schedules  required  for  the  work  of  the  various  trades  and  the 
Architect  shall  pass  upon  them  with  reasonable  promptness.  The  Contractor  shall 
make  any  corrections  required  by  the  Architect,  file  with  him  two  corrected  copies 
and  furnish  such  copies  as  may  be  needed.  The  Architect's  approval  of  such 
drawings  or  schedules  shall  not  relieve  the  Contractor  from  responsibility  for 
deviations  from  drawings  or  specifications,  unless  he  has  in  writing  called  the 
Architect's  attention  to  such  deviations  at  the  time  of  submission,  nor  shall 
it  relieve  him  from  responsibility  for  errors  of  any  sort  in  shop  drawings  or 
schedules. 

Art.  6.  Drawings  and  Specifications  on  the  Work.  —  The  Contractor  shall  keep 
one  copy  of  all  drawings  and  specifications  on  the  work,  in  good  order,  available 
to  the  Architect  and  to  his  representatives. 

Art.  7.  Ownership  of  Drawings  and  Models.  —  All  drawings,  specifications  and 
copies  thereof  furnished  by  the  Architect  are  his  property.  They  are  not  to  be  used 
on  other  work  and,  with  the  exception  of  the  signed  contract  set,  are  to  be  returned 
to  him  on  request,  at  the  completion  of  the  work.  All  models  are  the  property  of 
the  Owner. 

Art.  8.  Samples.  —  The  Contractor  shall  furnish  for  approval  all  samples  as 
directed.  The  work  shall  be  in  strict  accordance  with  approved  samples. 

Art.  9.  The  Architect's  Status.  —  The  Architect  shall  have  general  supervision 
and  direction  of  the  work.  He  is  not  the  agent  of  the  Owner,  except  as  provided  in 
the  Contract  Documents  and  when  in  special  instances  he  is  authorized  by  the 
Owner  to  act,  and  in  such  instances  he  shall,  upon  request,  show  the  Contractor 
written  authority.  He  has  authority  to  stop  the  work  whenever  such  stoppage 
may  be  necessary  to  insure  the  proper  execution  of  the  Contract. 

In  case  of  the  termination  of  the  employment  of  the  Architect,  the  Owner  shall 
appoint  a  capable  and  reputable  Architect,  whose  status  under  the  contract  shall  be 
that  of  the  former  Architect. 

Art.  10.  The  Architect's  Decisions.  —  The  Architect  shall,  within  a  reasonable 
tune,  make  decisions  on  all  claims  of  the  Owner  or  Contractor  and  on  all  other 
matters  relating  to  the  execution  and  progress  of  the  work  or  the  interpretation  of 
the  Contract  Documents. 

Except  as  may  be  otherwise  expressly  provided  in  or  appended  to  these  General 
Conditions  or  as  particularly  set  forth  in  the  specifications,  all  the  Architect's  deci- 
sions are  subject  to  arbitration. 

Art.  11.  Foreman,  Supervision.  —  The  Contractor  shall  keep  on  the  work  a 
competent  general  foreman  and  any  necessary  assistants,  all  satisfactory  to  the 
Architect.  The  general  foreman  shall  not  be  changed  except  with  the  consent  of 
the  Architect.  The  foreman  shall  represent  the  Contractor  in  his  absence  and  all 
directions  given  to  him  shall  be  as  binding  as  if  given  to  the  Contractor.  On  written 
request  such  directions  shall  be  confirmed  in  writing  to  the  Contractor. 

The  Contractor  shall  give  efficient  supervision  to  the  work,  using  his  best  skill 
and  attention.  He  shall  carefully  study  and  compare  all  drawings,  specifications 
and  other  instructions  and  shall  at  once  report  to  the  Architect  any  error,  incon- 
sistency or  omission  which  he  may  discover. 

Art.  12.  Materials,  Labor,  Appliances.  —  Unless  otherwise  stipulated,  the 
Contractor  shall  provide  and  pay  for  all  materials,  labor,  water,  tools,  equipment, 
light  and  power  necessary  for  the  execution  of  the  work. 

Unless  otherwise  specified,  all  materials  shall  be  new  and  both  workmanship 


ADDITIONAL   CONTRACT   FORMS  17-37 

and  materials  shall  be  of  good  quality.  The  contractor  shall,  if  required,  furnish 
satisfactory  evidence  as  to  the  kind  and  quality  of  materials. 

The  Contractor  shall  not  employ  on  the  work  any  unfit  person  or  anyone  not 
skilled  in  the  work  assigned  to  him. 

Art.  13.  Inspection  of  Work.  —  The  Owner,  the  Architect  and  their  representa- 
tives shall  at  all  times  have  access  to  the  work  wherever  it  is  in  preparation  or  prog- 
ress and  the  Contractor  shall  provide  proper  facilities  for  such  access  and  for 
inspection. 

If  the  specifications,  the  Architect's  instructions,  laws,  ordinances  or  any  public 
authority  require  any  work  to  be  specially  tested  or  approved,  the  Contractor  shall 
give  the  Architect  timely  notice  of  its  readiness  for  inspection  and  the  Architect 
shall  promptly  inspect  it.  If  any  such  work  should  be  covered  up  without  approval 
or  consent,  it  must,  if  required  by  the  Architect,  be  uncovered  for  examination  at 
the  Contractor's  expense. 

Re-examination  of  questioned  work  may  be  ordered  by  the  Architect  and,  if 
found  not  in  accordance  with  the  Contract,  all  expense  of  re-examination  and  re- 
placement shall  be  borne  by  the  Contractor,  otherwise  it  shall  be  allowed  as  extra 
work. 

Art.  14.  Correction  of  Work  before  Final  Payment.  —  The  Contractor  shall 
promptly  remove  from  the  premises  all  materials,  whether  worked  or  unworked,  and 
take  down  and  remove  all  portions  of  the  work  condemned  by  the  Architect  as  fail- 
ing to  conform  to  the  Contract ;  and  the  Contractor  shall  promptly  replace  and 
re-execute  his  own  work  in  accordance  with  the  Contract  and  without  expense  to 
the  Owner  and  shall  bear  the  expense  of  making  good  all  work  of  other  contractors 
destroyed  or  damaged  by  such  removal  or  replacement. 

If  the  Contractor  does  not  remove  such  condemned  work  and  materials  within  a 
reasonable  time,  fixed  by  written  notice,  the  Owner  may  remove  them  and  may  store 
the  material  at  the  expense  of  the  Contractor.  If  the  Contractor  does  not  pay  the 
expense  of  such  removal  within  five  days  thereafter,  the  Owner  may,  upon  ten  days' 
written  notice,  sell  such  materials  at  auction  or  at  private  sale  and  shall  account  for 
the  net  proceeds  thereof,  after  deducting  all  the  costs  and  expenses  that  should  have 
been  borne  by  the  Contractor. 

Art.  15.  Deductions  for  Uncorrected  Work.  —  If  the  Architect  deems  it  inex- 
pedient to  correct  work  injured  or  not  done  in  accordance  with  the  Contract,  the 
difference  in  value  together  with  a  fair  allowance  for  damage  shall  be  deducted,  if 
acceptable  to  the  Owner. 

Art.  16.  Correction  of  Work  After  Final  Payment.  —  Neither  the  final  certifi- 
cate nor  payment  nor  any  provision  in  the  Contract  Documents  shall  relieve  the 
Contractor  of  responsibility  for  negligence  or  faulty  materials  or  workmanship 
within  the  extent  and  period  provided  by  law,  and  upon  written  notice  he  shall 
remedy  any  defects  due  thereto  and  pay  for  any  damage  to  other  work  resulting 
therefrom.  All  questions  arising  under  this  Article  shall  be  decided  under  Articles 
10  and  45. 

Art.  17.  Protection  of  Work  and  Property.  —  The  Contractor  shall  continuously 
maintain  adequate  protection  of  all  his  work  from  damage  and  shall  protect  the 
Owner's  and  adjacent  property  from  injury  arising  in  connection  with  this  Contract. 
He  shall  make  good  any  such  damage  or  injury,  except  such  as  may  be  directly  due 
to  errors  in  the  contract  documents. 

Art.  18.  Emergencies.  —  In  an  emergency  affecting  the  safety  of  life  or  of  the 
structure  or  of  adjoining  property,  not  considered  by  the  Contractor  as  within  the 


17-38  ADDITIONAL   CONTRACT   FORMS 

provisions  of  Article  17,  then  the  Contractor,  without  special  instruction  or  authori- 
zation from  the  Architect  or  Owner,  is  hereby  permitted  to  act,  at  his  discretion,  to 
prevent  such  threatened  loss  or  injury,  and  he  shall  so  act,  without  appeal,  if  so 
instructed  or  authorized.  Any  compensation  claimed  to  be  due  to  him  therefor 
shall  be  determined  under  Articles  10  and  45  regardless  of  the  limitations  in  Article 
25  and  in  the  second  paragraph  of  Article  24. 

Art.  19.  Damage  to  Persons.  —  In  addition  to  the  liability  imposed  by  law 
upon  the  Contractor  on  account  of  bodily  injury  or  death  suffered  through  the  Con- 
tractor's negligence,  which  liability  is  not  impaired  or  otherwise  affected  hereby,  the 
Contractor  hereby  assumes,  in  cases  not  embraced  within  such  legal  liability,  the 
obligation  to  save  the  owner  harmless  and  indemnify  him  from  every  expense, 
liability  or  payment  (voluntary  payments  excepted),  by  reason  of  any  injury  to  any 
person  or  persons,  including  death,  suffered  through  any  act  or  omission  of  the 
Contractor  or  any  Subcontractor,  or  anyone  directly  or  indirectly  employed  by 
either  of  them,  in  the  prosecution  of  any  work  included  in  this  Contract. 

Art.  20.  Liability  Insurance.  —  The  Contractor  shall  maintain  such  insurance 
as  will  protect  him  from  claims  under  workmen's  compensation  acts  and  from  any 
other  claims  for  damages  for  personal  injury,  including  death,  which  may  arise  from 
operations  under  this  Contract.  Certificates  of  such  insurance  shall  be  filed  with 
the  Owner,  if  he  so  require,  and  shall  be  subject  to  his  approval  for  adequacy  of 
protection.  The  Owner  shall  be  responsible  for  his  own  contingent  liability. 

Art.  21.  Fire  Insurance.  —  The  Owner  shall  effect  and  maintain  fire  insurance 
upon  the  entire  structure  on  which  the  work  of  this  Contract  is  to  be  done  and  upon 
all  materials,  tools  and  appliances  in  or  adjacent  thereto  and  intended  for  use  there- 
on, to  at  least  eighty  per  cent  of  the  insurable  value  thereof.  The  loss,  if  any,  is 
to  be  made  adjustable  with  and  payable  to  the  Owner  as  Trustee  for  whom  it  may 
concern. 

All  policies  shall  be  open  to  inspection  by  the  Contractor.  If  the  Owner  fails  to 
show  them  on  request  or  if  he  fails  to  effect  or  maintain  insurance  as  above,  the 
Contractor  may  insure  his  own  interest  and  charge  the  cost  thereof  to  the  Owner. 
If  the  Contractor  is  damaged  by  failure  of  the  Owner  to  maintain  such  insurance,  he 
may  recover  under  Art.  39. 

If  required  in  writing  by  any  party  in  interest,  the  Owner  as  Trustee  shall,  upon 
the  occurrence  of  loss,  give  bond  for  the  proper  performance  of  his  duties.  He  shall 
deposit  any  money  received  from  insurance  in  an  account  separate  from  all  his  other 
funds  and  he  shall  distribute  it  in  accordance  with  such  agreement  as  the  parties  in 
interest  may  reach,  or  under  an  award  of  arbitrators  appointed,  one  by  the  Owner, 
another  by  joint  action  of  the  other  parties  in  interest,  all  other  procedure  being  in 
accordance  with  Art.  45.  If  after  loss  no  special  agreement  is  made,  replacement  of 
injured  work  shall  be  ordered  under  Art.  24. 

The  Trustee  shall  have  power  to  adjust  and  settle  any  loss  with  the  insurers 
unless  one  of  the  contractors  interested  shall  object  in  writing  within  three  working 
days  of  the  occurrence  of  loss  and  thereupon  arbitrators  shall  be  chosen  as  above. 
The  Trustee  shall  in  that  case  make  settlement  with  the  insurers  in  accordance  with 
the  directions  of  such  arbitrators,  who  shall  also,  if  distribution  by  arbitration  is 
required,  direct  such  distribution. 

Art.  22.  Guaranty  Bonds.  —  The  Owner  shall  have  the  right  to  require  the 
Contractor  to  give  bond  covering  the  faithful  performance  of  the  Contract  and  the 
payment  of  all  obligations  arising  thereunder,  in  such  form  as  the  Owner  may 
prescribe  and  with  such  sureties  as  he  may  approve.  If  such  bond  is  required  by 


ADDITIONAL   CONTRACT  FORMS  17—39 

instructions  given  previous  to  the  receipt  of  bids,  the  premium  shall  be  paid  by  the 
Contractor ;  if  subsequent  thereto,  it  shall  be  paid  by  the  Owner. 

Art.  23.  Cash  Allowances.  —  The  Contractor  shall  include  in  the  contract  price 
all  allowances  named  in  the  Contract  Documents  and  shall  cause  the  work  so  covered 
to  be  done  by  such  contractors  and  for  such  sums  as  the  Architect  may  direct,  the 
contract  sum  being  adjusted  in  conformity  therewith.  The  Contractor,  in  making 
up  his  bid,  shall  add  such  sums  for  expenses  and  profit  on  account  of  cash  allow- 
ances as  he  deems  proper  and  no  demand  for  expenses  or  profit  other  than  those 
included  in  the  contract  sum  shall  be  allowed.  The  Contractor  shall  not  be  required 
to  employ  for  any  such  work  a  Subcontractor  against  whom  he  has  a  reasonable 
objection. 

Art.  24.  Changes  in  the  Work.  —  The  Owner,  without  invalidating  the  Contract, 
may  make  changes  by  altering,  adding  to  or  deducting  from  the  work,  the  contract 
sum  being  adjusted  accordingly.  All  such  work  shall  be  executed  under  the  condi- 
tions of  the  original  Contract  except  that  any  claim  for  extension  of  time  caused 
thereby  shall  be  adjusted  at  the  time  of  ordering  such  change. 

Except  as  provided  in  Articles  9  and  18,  no  change  shall  be  made  unless  in  pursu- 
ance of  a  written  order  from  the  Owner  signed  or  countersigned  by  the  Architect  and 
no  claim  for  an  addition  to  the  contract  sum  shall  be  valid  unless  so  ordered. 

The  value  of  any  such  change  shall  be  determined  in  one  or  more  of  the  following 
ways: 

(a)  By  Estimate  and  Acceptance  in  a  lump  sum. 

(b)  By  Unit  Prices  named  in  the  contract  or  subsequently  agreed  upon. 

(c)  By  Cost  and  Percentage  or  by  Cost  and  a  fixed  fee. 

(d)  If  none  of  the  above  methods  is  agreed  upon,  the  Contractor,  provided  he  receive 

an  order  in  writing  signed  by  the  Owner  and  countersigned  by  the  Architect, 
shall  proceed  with  the  work,  no  appeal  to  arbitration  being  allowed  from  such 
order  to  proceed. 

In  cases  (c)  and  (d),  the  Contractor  shall  keep  and  present  in  such  form  as  the 
Architect  may  direct,  a  correct  account  of  the  net  cost  of  labor  and  materials, 
together  -with  vouchers.  In  any  case,  the  Architect  shall  certify  to  the  amount, 
including  a  reasonable  profit,  due  to  the  Contractor.  Pending  final  determination 
of  value,  payments  on  account  of  changes  shall  be  made  on  the  Architect's  cer- 
tificate. 

Art.  25.  Claims  for  Extras. — If  the  Contractor  claims  that  any  instructions,  by 
drawings  or  otherwise,  involve  extra  cost  under  this  Contract,  he  shall  give  the 
Architect  written  notice  thereof  before  proceeding  to  execute  the  work  and,  in  any 
event,  within  two  weeks  of  receiving  such  instructions,  and  the  procedure  shall 
then  be  as  provided  in  the  last  paragraph  of  Art.  24.  No  such  claim  shall  be  valid 
unless  so  made. 

Art.  26.  Applications  for  Payments.  —  The  Contractor  shall  submit  to  the 
Architect  an  application  for  each  payment  and,  if  required,  receipts  or  other  vouchers 
from  subcontractors  showing  his  payments  to  them  for  materials  and  labor  as 
required  by  Article  44. 

If  payments  are  made  on  valuation  of  work  done,  such  application  shall  be  sub- 
mitted at  least  ten  days  before  each  payment  falls  due.  If  required,  the  Contractor 
shall  before  the  first  application  submit  to  the  Architect  a  schedule  of  values  of  the 
various  parts  of  the  work,  aggregating  the  total  sum  of  the  Contract,  divided  so  as  to 
facilitate  payments  to  subcontractors  in  accordance  with  Article  44  (e)  made  out  in 
such  form  as  the  Architect  may  direct  and,  if  required,  supported  by  evidence  as  to 


17—40  ADDITIONAL   CONTRACT  FORMS 

its  correctness.  This  schedule,  when  approved  by  the  Architect,  shall  be  used  as  a 
basis  for  certificates  of  payment,  unless  it  be  found  to  be  in  error.  In  applying  for 
payments,  the  Contractor  shall  submit  a  statement  based  upon  this  schedule  and, 
if  required,  itemized  in  such  form  as  the  Architect  may  direct,  showing  his  right  to 
the  payment  claimed. 

Art.  27.  Certificates  and  Payments.  —  If  the  Contractor  has  made  application 
as  above,  the  Architect  shall,  not  later  than  the  date  when  each  payment  falls  due, 
issue  to  the  Contractor  a  certificate  for  such  amount  as  he  decides  to  be  properly 
due. 

No  certificate  issued  nor  payment  made  to  the  Contractor,  nor  partial  or  entire 
use  or  occupancy  of  the  work  by  the  Owner  shall  be  an  acceptance  of  any  work  or 
materials  not  in  accordance  with  this  Contract.  The  making  and  acceptance  of  the 
final  payment  shall  constitute  a  waiver  of  all  claims  by  the  Owner,  otherwise  than 
under  Articles  16  and  29  of  these  conditions  or  under  requirement  of  the  specifica- 
tions, and  all  of  claims  by  the  Contractor,  except  those  previously  made  and  still 
unsettled. 

Should  the  Owner  fail  to  pay  the  sum  named  in  any  certificate  of  the  Architect 
or  in  any  award  by  arbitration,  upon  demand  when  due,  the  Contractor  ,shall 
receive,  in  addition  to  the  sum  named  in  the  certificate,  interest  thereon  at  the  legal 
rate  in  force  at  the  place  of  building. 

Art.  28.  Payments  Withheld.  —  The  Architect  may  withhold  or,  on  account  of 
subsequently  discovered  evidence,  nullify  the  whole  or  a  part  of  any  certificate  for 
payment  to  protect  the  Owner  from  loss  on  account  of : 

(a)  Defective  work  not  remedied. 

(b)  Claims  filed  or  reasonable  evidence  indicating  probable  filing  of  claims. 

(c)  Failure  of  the  Contractor  to  make  payments  properly  to  subcontractors  or  for 

material  or  labor. 

(d)  A  reasonable  doubt  that  the  Contract  can  be  completed  for  the  balance  then 

unpaid. 

When  all  the  above  grounds  are  removed  certificates  shall  at  once  be  issued 
for  amounts  withheld  because  of  them. 

Art.  29.  Liens.  —  Neither  the  final  payment  nor  any  part  of  the  retained  per- 
centage shall  become  due  until  the  Contractor,  if  required,  shall  deliver  to  the 
Owner,  a  complete  release  of  all  liens  arising  out  of  this  Contract,  or  receipts  in  full 
in  lieu  thereof  and,  if  required  in  either  case,  an  affidavit  that  the  releases  and  receipt 
include  all  the  labor  and  material  for  which  a  lien  might  be  filed ;  but  the  Contractor 
may,  if  any  subcontractor  refuses  to  furnish  a  release  or  receipt  in  full,  furnish  a 
bond  satisfactory  to  the  Owner,  to  indemnify  him  against  any  claim  by  lien  or 
otherwise.  If  any  lien  or  claim  remain  unsatisfied  after  all  payments  are  made,  the 
Contractor  shall  refund  to  the  Owner  all  moneys  that  the  latter  may  be  compelled 
to  pay  in  discharging  such  lien  or  claim,  including  all  costs  and  a  reasonable  attor- 
ney's fee. 

Art.  30.  Permits  and  Regulations.  —  The  Contractor  shall  obtain  and  pay  for 
all  permits  and  licenses,  but  not  permanent  easements,  and  shall  give  all  notices, 
pay  all  fees,  and  comply  with  all  laws,  ordinances,  rules  and  regulations  bearing  on 
the  work.  If  the  drawings  and  specifications  are  at  variance  therewith,  the  Con- 
tractor shall  notify  the  Architect  in  writing  before  the  work  is  performed  and  the 
value  of  any  necessary  changes  shall  be  adjusted  under  Art.  24.  If  any  of  the  Con- 
tractor's work  shall  be  done  contrary  to  such  laws,  ordinances,  rules,  and  regulations, 
without  such  notice,  he  shall  bear  all  costs  arising  therefrom. 


ADDITIONAL  CONTRACT  FORMS  17-41 

Art.  31.  Royalties  and  Patents.  —  The  Contractor  shall  pay  all  royalties  and 
license  fees  and  shall  defend  all  suits  or  claims  whatsoever  for  infringement  of  any 
patent  rights  and  shall  save  the  Owner  harmless  from  loss  on  account  thereof. 

Art.  32.  Use  of  Premises.  —  The  Contractor  shall  confine  his  apparatus,  the 
storage  of  materials  and  the  operations  of  his  workmen  to  limits  indicated  by  law, 
ordinances,  permits  or  directions  of  the  Architect  and  shall  not  encumber  the 
premises  with  his  materials. 

The  Contractor  shall  not  load  or  permit  any  part  of  the  structure  to  be  loaded 
with  a  weight  that  will  endanger  its  safety. 

The  Contractor  shall  enforce  the  Architect's  instructions  regarding  signs, 
advertisements,  fires  and  smoking. 

Art.  33.  Cleaning  Up.  —  The  Contractor  shall  at  all  times  keep  the  premises  free 
from  accumulations  of  waste  material  or  rubbish  caused  by  his  employees  or  work, 
and  at  the  completion  of  the  work  he  shall  remove  all  his  rubbish  from  and  about 
the  building  and  all  his  tools,  scaffolding  and  surplus  materials  and  shall  leave  his 
work  clean  and  ready  for  use.  In  case  of  dispute  the  Owner  may  remove  the  rubbish 
and  charge  the  cost  to  the  several  contractors  as  the  Architect  shall  determine  to  be 
just. 

Art.  34.  Cutting,  Patching  and  Digging.  —  The  Contractor  shall  do  all  cutting, 
fitting  or  patching  of  his  work  that  may  be  required  to  make  its  several  parts  come 
together  properly  and  fit  it  to  receive  or  be  received  by  work  of  other  contractors 
shown  upon,  or  reasonably  implied  by,  the  Drawings  and  Specifications  for  the  com- 
pleted structure  and  he  shall  make  good  after  them,  as  the  Architect  may  direct. 

Any  cost  caused  by  defective  or  ill-timed  work  shall  be  borne  by  the  party 
responsible  therefor. 

The  Contractor  shall  not  endanger  any  work  by  cutting,  digging  or  otherwise 
and  shall  not  cut  or  alter  the  work  of  any  other  contractor,  save  with  the  consent  of 
the  Architect. 

Art.  35.  Delays.  —  If  the  Contractor  is  delayed  in  the  completion  of  the  work 
by  any  act  or  neglect  of  the  Owner  or  the  Architect,  or  of  any  employee  of  either,  or 
by  any  other  contractor  employed  by  the  Owner,  or  by  changes  ordered  in  the  work, 
or  by  strikes,  lockouts,  fire,  unavoidable  casualties  or  any  causes  beyond  the  Con- 
tractor's control,  or  by  delay  authorized  by  the  Architect  pending  arbitration,  or 
by  any  cause  which  the  Architect  shall  decide  to  justify  the  delay,  then  the  time  of 
completion  shall  be  extended  for  such  reasonable  time  as  the  Architect  may  decide. 

No  such  extension  shall  be  made  for  delay  occurring  more  than  seven  days  before 
claim  therefor  is  made  in  writing  to  the  Architect.  In  the  case  of  a  continuing  cause 
of  delay,  only  one  claim  is  necessary. 

If  no  schedule  is  made  under  Art.  3,  no  claim  for  delay  shall  be  allowed  on  account 
of  failure  to  furnish  drawings  until  two  weeks  after  demand  for  such  drawings  and 
not  then  unless  such  claim  be  reasonable. 

Art.  36.  Owner's  Right  to  Do  Work.  —  If  the  Contractor  should  neglect  to 
prosecute  the  work  properly  or  fail  to  perform  any  provision  of  this  Contract,  the 
Owner,  after  three  days'  written  notice  to  the  Contractor,  may,  without  prejudice 
to  any  other  remedy  he  may  have,  make  good  such  deficiencies  and  may  deduct  the 
cost  thereof  from  the  payment  then  or  thereafter  due  the  Contractor ;  provided, 
however,  that  the  Architect  shall  approve  both  such  action  and  the  amount  charged 
to  the  Contractor. 

Art.  37.  Owner's  Right  to  Terminate  Contract.  —  If  the  Contractor  should  be 
adjudged  a  bankrupt,  or  if  he  should  make  a  general  assignment  for  the  benefit  of 


17—42  ADDITIONAL   CONTRACT   FORMS 

his  creditors,  or  if  a  receiver  should  be  appointed  on  account  of  his  insolvency,  or  if 
he  should,  except  in  cases  recited  in  Article  35,  persistently  or  repeatedly  refuse  or 
fail  to  supply  enough  properly  skilled  workmen  or  proper  materials,  of  if  he  should 
fail  to  make  prompt  payment  to  subcontractors  or  for  material  or  labor,  or  persi?t- 
ently  disregard  laws,  ordinances  or  the  instructions  of  the  Architect,  or  otherwise  be 
guilty  of  a  substantial  violation  of  any  provision  of  the  Contract,  then  the  Owner, 
upon  the  certificate  of  the  Architect  that  sufficient  cause  exists  to  justify  such  action, 
may,  without  prejudice  to  any  other  right  or  remedy  and  after  giving  the  Contractor 
seven  days'  written  notice,  terminate  the  employment  of  the  Contractor  and  take 
possession  of  the  premises  and  of  all  materials,  tools  and  appliances  thereon  and 
finish  the  work  by  whatever  method  he  may  deem  expedient.  In  such  case  the 
Contractor  shall  not  be  entitled  to  receive  any  further  payment  until  the  work  is 
finished.  If  the  unpaid  balance  of  the  contract  price  shall  exceed  the  expense  of 
finishing  the  work,  including  compensation  to  the  Architect  for  his  additional  ser- 
vices, such  excess  shall  be  paid  to  the  Contractor.  If  such  expense  shall  exceed  such 
unpaid  balance,  the  Contractor  shall  pay  the  difference  to  the  Owner.  The  expense 
incurred  by  the  Owner  as  herein  provided,  and  the  damage  incurred  through  the 
Contractor's  default,  shall  be  certified  by  the  Architect. 

Art.  38.  Contractor's  Right  to  Stop  Work  or  Terminate  Contract.  —  If  the  work 
should  be  stopped  under  an  order  of  any  court,  for  a  period  of  three  months,  through 
no  act  or  fault  of  the  Contractor  or  of  any  one  employed  by  him,  or  if  the  Owner 
should  fail  to  pay  to  the  Contractor,  within  seven  days  of  its  maturity  and  presenta- 
tion, any  sum  certified  by  the  Architect  or  awarded  by  arbitrators,  then  the  Con- 
tractor may,  upon  three  days'  written  notice  to  the  Owner  and  the  Architect,  stop 
work  or  terminate  this  Contract  and  recover  from  the  Owner  payment  for  all  work 
executed  and  any  loss  sustained  upon  any  plant  or  material  and  reasonable  profit 
and  damages. 

Art.  39.  Damages.  —  If  either  party  to  this  Contract  should  suffer  damage  by 
delay  or  otherwise,  except  as  provided  in  Art.  40,  because  of  any  act  or  neglect  of 
the  other  party  or  of  any  one  employed  by  him,  then  he  shall  be  reimbursed  by  the 
other  party  for  such  damage. 

Claims  under  this  clause  shall  be  made  in  writing  to  the  party  liable  within  a 
reasonable  time  of  the  first  observance  of  such  damage  and  not  later  than  the  tune 
of  final  payment,  except  in  case  of  claims  under  Article  16,  and  shall  be  adjusted 
by  agreement  or  arbitration. 

Art.  40.  Mutual  Responsibility  of  Contractors.  —  Should  the  Contractor  (see 
Art.  1  (c))  cause  damage  to  any  other  person  (see  Art.  1  (e))  employed  on  the  work, 
the  Contractor  agrees,  upon  due  notice,  to  settle  with  such  person  by  agreement  or 
arbitration,  if  such  person  will  so  settle.  If  such  person  sues  the  Owner  on  account 
of  any  damage  alleged  to  have  been  so  sustained,  the  Owner  shall  notify  the  Con- 
tractor, who  shall,  at  his  own  expense,  defend  such  proceedings  and,  if  any  judgment 
against  the  Owner  arise  therefrom,  the  Contractor  shall  pay  or  satisfy  it  and  pay 
all  cost  incurred  by  the  Owner. 

The  Contractor,  if  damaged  by  any  person  held  to  the  Owner  by  stipulations 
such  as  the  above,  agrees  to  settle  with  such  person  by  agreement  or  arbitration  and 
in  no  case  to  sue  the  Owner  on  account  of  such  damage. 

Art.  41.  Separate  Contracts.  —  The  Owner  reserves  the  right  to  let  other  con- 
tracts in  connection  with  this  work.  The  Contractor  shall  afford  other  contractors 
reasonable  opportunity  for  the  introduction  and  storage  of  their  materials  and  the 
execution  of  their  work  and  shall  properly  connect  and  coordinate  his  work  and  theirs. 


ADDITIONAL   CONTRACT  FORMS  17-43 

If  any  part  of  the  Contractor's  work  depends  for  proper  execution  or  results  upon 
the  work  of  any  other  contractor,  the  Contractor  shall  inspect  and  promptly  report 
to  the  Architect  any  defects  in  such  work  that  render  it  unsuitable  for  such  proper 
execution  and  results.  His  failure  so  to  inspect  and  report  shall  constitute  an 
acceptance  of  the  other  contractor's  work  as  fit  and  proper  for  the  reception  of  his 
work,  except  as  to  defects  which  may  develop  in  the  other  contractor's  work  after 
the  execution  of  his  work. 

To  insure  the  proper  execution  of  his  subsequent  work  the  Contractor  shall 
measure  work  already  in  place  and  shall  at  once  report  to  the  Architect  any  discrep- 
ancy between  the  executed  work  and  the  drawings. 

Art.  42.  Assignment.  —  Neither  party  to  the  Contract  shall  assign  the  Contract 
without  the  written  consent  of  the  other,  nor  shall  the  Contractor  assign  any  moneys 
due  or  to  become  due  to  him  hereunder,  without  the  previous  written  consent  of  the 
Owner. 

Art.  43.  Subcontracts.  —  The  Contractor  shall  notify  the  Architect  in  writing 
of  the  names  of  subcontractors  proposed  for  the  principal  parts  of  the  work  and  for 
such  others  as  the  Architect  may  direct  and  shall  not  employ  any  that  the  Architect 
may  within  a  reasonable  time  object  to  as'  incompetent  or  unfit. 

The  Contractor  may  in  his  discretion  or  shall,  if  so  required,  submit  with  his 
proposal,  a  list  of  subcontractors.  If  the  change  of  any  name  on  such  list  is  required 
or  permitted  after  signature  of  agreement,  the  contract  price  shall  be  increased  or 
diminished  by  the  difference  between  the  two  bids. 

The  Architect  shall,  on  request,  furnish  to  any  subcontractor,  wherever  practi- 
cable, evidence  of  the  amounts  certified  to  on  his  account. 

The  Contractor  agrees  to  be  fully  responsible  to  the  Owner  for  the  acts  or  omis- 
sions of  his  subcontractors  and  of  any  one  employed  either  directly  or  indirectly  by 
him  or  them,  and  this  contractual  obligation  shall  be  in  addition  to  the  liability 
imposed  by  law  upon  the  Contractor  for  bodily  injuries  or  death  through  negligence 
in  the  cases  covered  by  Article  19  hereof. 

Nothing  contained  in  the  Contract  Documents  shall  create  any  contractual 
relation  between  any  subcontractor  and  the  Owner. 

Art.  44.  Relations  of  Contractor  and  Subcontractor.  —  The  Contractor  agrees 
to  bind  every  subcontractor  and  every  subcontractor  agrees  to  be  bound,  by  the 
terms  of  the  General  Conditions,  Drawings  and  Specifications,  as  far  as  applicable 
to  his  work,  including  the  following  provisions  of  this  Article,  unless  specifically 
noted  to  the  contrary  in  a  subcontract  approved  in  writing  as  adequate  by  the 
Owner  or  Architect. 

The  Subcontractor  agrees  — 

(a)  To  be  bound  to  the  Contractor  by  the  terms  of  the  General  Conditions,  Draw- 

ings and  Specifications  and  to  assume  toward  him  all  the  obligations 
and  responsibilities  that  he,  by  those  documents,  assumes  toward  the 
Owner. 

(b)  To  submit  to  the  Contractor  applications  for  payment  in  such  reasonable  time 

as  to  enable  the  Contractor  to  apply  for  payment  under  Article  26  of  the 
General  Conditions. 

(c)  To  make  all  claims  for  extras,  for  extensions  of  time  and  for  damages  for  delays 

or  otherwise,  to  the  Contractor  in  the  manner  provided  in  the  General  Condi- 
tions for  like  claims  by  the  Contractor  upon  the  Owner,  except  that  the  time 
for  making  claims  for  extra  cost  as  under  Article  25  of  the  General  Conditions 
is  one  week. 


17-44  ADDITIONAL   CONTRACT   FORMS 

The  Contractor  agrees  — 

(d)  To  be  bound  to  the  Subcontractor  by  all  obligations  that  the  Owner  assumes  to 

the  Contractor  under  the  General  Conditions,  Drawings  and  Specifications 
and  by  all  the  provisions  thereof  affording  remedies  and  redress  to  the  Con- 
tractor from  the  Owner. 

(e)  To  pay  the  Subcontractor,  upon  the  issuance  of  certificates,  if  issued  under  the 

schedule  of  values  described  in  Article  26  of  the  General  Conditions,  the 
amount  allowed  to  the  Contractor  on  account  of  the  Subcontractor's  work 
to  the  extent  of  the  Subcontractor's  interest  therein. 

(f)  To  pay  the  Subcontractor,  upon  the  issuance  of  certificates,  if  issued  otherwise 

than  as  in  (e),  so  that  at  all  times  his  total  payments  shall  be  as  large  in  pro- 
portion to  the  value  of  the  work  done  by  him  as  the  total  amount  certified 
to  the  Contractor  is  to  the  value  of  the  work  done  by  him. 

(g)  To  pay  the  Subcontractor  to  such  extent  as  may  be  provided  by  the  Contract 

Documents  or  the  subcontract,  if  either  of  these  provides  for  earlier  or  larger 
payments  than  the  above. 

(h)  To  pay  the  Subcontractor  on  demand  for  his  work  or  materials  as  far  as  executed 
and  fixed  in  place,  less  the  retained  percentage,  at  the  time  the  certificate 
should  issue,  even  though  the  Architect  fails  to  issue  it  for  any  cause  not  the 
fault  of  the  Subcontractor. 

(j)  To  pay  the  Subcontractor  a  just  share  of  any  fire  insurance  money  received  by 
him,  the  Contractor,  under  Article  21  of  the  General  Conditions. 

(k)  To  make  no  demand  for  liquidated  damages  or  penalty  for  delay  in  any  sum  in 
excess  of  such  amount  as  may  be  specifically  named  in  the  subcontract. 

(1)  That  no  claim  for  services  rendered  or  materials  furnished  by  the  Contractor  to 
the  Subcontractor  shall  be  valid  unless  written  notice  thereof  is  given  by  the 
Contractor  to  the  Subcontractor  during  the  first  ten  days  of  the  calendar 
month  following  that  in  which  the  claim  originated. 

(m)  To  give  the  Subcontractor  an  opportunity  to  be  present  and  to  submit  evidence 
in  any  arbitration  involving  his  rights. 

(n)  To  name  as  arbitrator  under  Article  45  of  the  General  Conditions  the  person 
nominated  by  the  Subcontractor,  if  the  sole  cause  of  dispute  is  the  work, 
materials,  rights  or  responsibilities  of  the  Subcontractor ;  or,  if  of  the  Sub- 
contractor and  any  other  subcontractor  jointly,  to  name  as  such  arbitrator 
the  person  upon  whom  they  agree. 
The  Contractor  and  the  Subcontractor  agree  that  — 

(o)  In  the  matter  of  arbitration,  their  rights  and  obligations  and  all  procedure  shall 

be  analogous  to  those  set  forth  in  Article  45  of  the  General  Conditions. 
Nothing  in  this  Article  shall  create  any  obligation  on  the  part  of  the  Owner  to 

pay  to  or  to  see  to  the  payment  of  any  sums  to  any  Subcontractor. 

Art.  45.  Arbitration.  —  Subject  to  the  provisions  of  Article  10,  all  questions  in 

dispute  under  this  Contract  shall  be  submitted  to  arbitration  at  the  choice  of  either 

party  to  the  dispute. 

The  general  procedure  shall  conform  to  the  laws  of  the  State  in  which  the  work 

lies,  and  wherever  permitted  by  law  the  decision  of  the  arbitrators  may  be  filed  in 

court  to  carry  it  into  effect. 

The  demand  for  arbitration  shall  be  filed  in  writing  with  the  Architect,  in  the 

case  of  an  appeal  from  his  decision,  within  ten  days  of  its  receipt  and  in  any  other 

case  within  a  reasonable  time  after  cause  thereof  and  in  no  case  later  than  the  time 

of  final  payment,  except  as  to  questions  arising  under  Article  16.    If  the  Architect 


ADDITIONAL   CONTRACT  FORMS  17-45 

fails  to  make  a  decision  within  a  reasonable  time,  an  appeal  to  arbitration  may  be 
taken  as  if  his  decision  had  been  rendered  against  the  party  appealing. 

The  parties  may  agree  upon  one  arbitrator ;  otherwise  there  shall  be  three,  one 
named  in  writing  by  each  party  and  the  third  chosen  by  these  two  arbitrators  or, 
if  they  fail  to  select  a  third  within  ten  days  he  shall  be  chosen  by  the  presiding 
officer  of  the  nearest  Bar  Association.  Should  the  party  demanding  arbitration  fail 
to  name  an  arbitrator  within  ten  days  of  his  demand,  his  right  to  arbitration  shall 
lapse.  Should  the  other  party  fail  to  choose  an  arbitrator  within  such  ten  days, 
the  Architect  shall  appoint  such  arbitrator.  Should  either  party  refuse  or  neglect  to 
supply  the  arbitrators  with  any  papers  or  information  demanded  in  writing,  the 
arbitrators  are  empowered  by  both  parties  to  take  ex  parte  proceedings. 

The  arbitrators  shall  act  with  promptness.  The  decision  of  any  two  shall  be 
binding  on  all  parties  to  the  dispute.  The  decision  of  the  arbitrators  upon  any 
question  subject  to  arbitration  under  this  Contract  shall  be  a  condition  precedent 
to  any  right  of  legal  action. 

The  arbitrators,  if  they  deem  that  the  case  demands  it,  are  authorized  to  award 
to  the  party  whose  contention  is  sustained  such  sums  as  they  shall  deem  proper  for 
the  time,  expense  and  trouble  incident  to  the  appeal  and,  if  the  appeal  was  taken 
without  reasonable  cause,  damages  for  delay.  The  arbitrators  shall  fix  their  own 
compensation,  unless  otherwise  provided  by  agreement,  and  shall  assess  the  costs 
and  charges  of  the  arbitration  upon  either  or  both  parties. 

The  award  of  the  arbitrators  must  be  in  writing  and,  if  in  writing,  shall  not  be 
open  to  objection  on  account  of  the  form  of  the  proceedings  or  the  award. 


CHAPTER  XVEI 
BOND 

The  comparative  values  of  personal  Bonds  and  of  surety  company 
Bonds,  and  of  certified  checks,  have  been  discussed  previously.  This 
chapter  is  concerned  mainly  with  the  form  of  Bonds. 

The  Contract  Bond  adopted  by  the  American  Railway  Engineering 
Association  has  the  following  form : 

A.  BOND 

Enow  all  Men  by  These  Presents : 

That   the   undersigned 

are  held  and  bound  unto  the 

in    the    sum    of dollars, 

lawful  money  of  the  United  States  of  America  (or  Canada,  as  the  case  may  be), 

to  be  paid  to  said its  successors  and  assigns,  to 

which  payment  the  undersigned,  jointly  and  severally,  bind  themselves,  their 
heirs,  executors,  administrators,  successors  and  assigns. 

The  Condition  of  this  Obligation  is  that  if 

Contractor,  shall  faithfully  furnish  and  do  everything  required  in  the  contract, 

executed  in  writing,  dated 19 .. 

between Contractor,  and ' Company, 

for this  obligation  shall  become  of  no  effect ;  other- 
wise it  shall  continue  in  full  force. 

Signed,  sealed  and  delivered  this day  of 19. .. 

Attest : 

(SEAL) 

This  is  substantially  the  same  in  form  as  that  used  by  the  Cambridge 
Bridge  Commission,  the  principal  point  of  difference  being  that  the  latter 
refers  to  the  "foregoing  Contract"  contained  probably  in  a  single  pamphlet, 
while  the  Bond  above  describes  the  Contract.  The  Cambridge  Bridge 
form  is  this : 

B.  BOND 

Know  all  Men  by  These  Presents  : 

That  the  undersigned  are  held  and  bound  unto  the  Cambridge  Bridge  Commis- 
sion in  the  sum  of  two  hundred  thousand  (200,000)  dollars,  lawful  money  of  the 
United  States  of  America,  to  be  paid  to  said  Commission  or  its  assigns,  to  which 

18-1 


18-2  BOND 

payment,  well  and  truly  to  be  made,  the  undersigned  jointly  and  severally  bind 
themselves,  their  heirs,  executors,  administrators,  successors  and  assigns. 

The  Condition  of  this  Obligation  is,  that  if  the  party  designated  as  Contractor 
in  the  foregoing  contract  shall  faithfully  furnish,  and  do  everything  required  therein 
of  said  party,  this  obligation  shall  become  of  no  effect,  otherwise  it  shall  continue 
in  full  force. 

Signed,  sealed  and  delivered  this  January  20,  1904. 

THE  CITY  TRUST  SAFE  DEPOSIT  AND  GUARANTY 

COMPANY  OF  PHILADELPHIA. 

Attest :  By  Jos.  A.  Sum,  2d  Vice  Pres.  (SEAL) 

Charles  H.  Laird,  Jr., 

Asst.  Secty. 

The  Corporation  or  Company  signing  above  is  incorporated  in  the  State  of 
Pennsylvania,  and  has  its  usual  place  of  business  in  Massachusetts  at  23  Central 
Street,  Boston. 

The  distinguishing  feature  of  either  of  these  is  its  simplicity.  The 
Contractor  has  made  his  Contract  and  agreed  to  furnish  and  to  do  certain 
things.  A  failure  to  keep  his  agreement  brings  the  Bond  into  action.  If 
the  Contract  recites  all  that  is  required  of  the  Contractor,  this  simple 
Bond  is  sufficient.  If  the  first  draft  of  the  Contract  omits  any  point  ordi- 
narily specially  covered  in  the  Bond,  the  Contract  should  be  revised  (before 
the  letting)  so  that  in  its  final  form  it  will  cover  everything  necessary. 
For  instance,  the  indemnity  clause  in  the  Uniform  Contract  Form  makes  an 
indemnity  clause  in  the  Bond  superfluous. 

In  the  above  forms  of  Bond,  the  Contractor  is  not  made  the  "principal" 
of  the  Bond.  Why  should  he  be  so  made  the  principal?  If  he  does  not 
do  what  he  agreed  in  his  Contract,  if  he  defaults,  why  should  one  have 
further  disagreement  and  trouble  with  him?  The  direct  way  is  to  reach 
the  surety.  A  lawsuit  with  the  surety  may  be  unnecessary  if  the  surety 
is  businesslike.  The  surety  will,  no  doubt,  have  an  agreement  with  the 
Contractor  by  which  to  recoup  himself  if  the  Contractor  is  solvent,  but 
that  is  his  affair.  It  is  cleaner  cut  for  the  railroad,  or  the  City,  to  look  to 
the  surety  directly,  rather  than  to  straddle  between  the  Contractor  and 
the  surety. 

The  question  may  arise  whether  a  surety  company  will  sign  a  Bond  in 
the  above  form.  An  answer  to  this  is  that  the  following  companies  did 
sign  the  above  form  of  Bond  of  the  Cambridge  Bridge  Commission : 

The  ./Etna  Indemnity  Company. 

United  States  Fidelity  and  Guaranty  Company. 

The  City  Trust,  Safe  Deposit,  and  Surety  Company  of  Philadelphia. 

American  Surety  Company  of  New  York. 

Empire  State  Surety  Company. 

National  Surety  Company. 

Fidelity  and  Deposit  Company  of  Maryland. 


BOND  18-3 

Another  form,  even  shorter,  but  in  essentials  the  same,  was  signed  by 
the  Metropolitan  Surety  Company  and  is  shown  here : 

C.  BOND 

The  undersigned  surety  company  hereby  binds  itself,  its  successors  and  assigns, 
to  pay  to  the  Cambridge  Bridge  Commission  the  sum  of  two  thousand  (2,000) 
dollars. 

This  obligation  is  upon  the  condition  that  if  the  party  to  the  contract  hereto 
annexed,  other  than  the  city,  shall  faithfully  furnish  and  do  everything  therein 
required  of  the  party,  the  obligation  shall  become  of  no  effect,  otherwise  it  shall 
continue  in  full  force. 

Signed,  sealed  and  delivered  this  January  3,  1907. 

METROPOLITAN  SURETY    COMPANY, 
(SEAL)  A.  S.  Brown,  Jr. 

Manager  and  Attorney  hi  Fact. 
Attest: 

Harry  A.  Chandler, 

Attorney  in  Fact. 

Corporation  is  of  the  state  of  New  York.1 
President  is  John  F.  Candlet. 
Treasurer  is  Frank  A.  Condon. 
Place  of  business  in  Boston  is  85  Water  Street. 

A  slightly  longer  form  is  the  following : 

D.  BOND 

Know  all  Men  by  These  Presents: 

That  we, 

as  principal  and 

as  surety  are  held  and  firmly  bound  unto  the  Commonwealth  of  Massachusetts 

in  the  sum  of 

lawful  money  of  the  United  States  of  America,  to  be  paid  to  the  Commonwealth, 
to  which  payment,  well  and  truly  to  be  made,  we  bind  ourselves,  our  respective 
heirs,  executors,  administrators,  successors  and  assigns,  jointly  and  severally,  firmly 
by  these  presents. 

Whereas,  the  said  principal  has  made  a  contract  with  the  Commonwealth, 
bearing  date  the day  of 1906,  for 

Now,  the  Condition  of  this  Obligation  is  such  that,  if  the  said  principal 
shall  in  all  things  stand  to  and  abide  by  and  well  and  truly  keep  and  perform 
all  the  agreements,  terms  and  conditions  of  said  contract  on  his  part  to  be 
kept  and  performed,  and  shall  also  pay  for  all  labor  performed  or  furnished,  and 
for  all  materials  used  in  the  carrying  out  of  said  contract,  then  this  obligation  shall 
be  void ;  otherwise  it  shall  remain  in  full  force  and  virtue. 

In  Witness  Whereof,  we  hereunto  set  our  hands  and  seals  this 

day  of in  the  year  nineteen  hundred  and 

(SEAL) 

(SEAL) 


18-4  BOND 

And  the  following  differs  mainly  in  phraseology  from  the  form  next 
above : 

E.  BOND   FOR  PERFORMANCE   OF   CONTRACT 

Know  all  Men  by  These  Presents, 

That  we as  principal ;  and 

as  surety,  are 

held  and  firmly  bound  unto  The  City  of  New  York,  in  the  sum  of 

dollars  ($ ),  lawful 

money  of  the  United  States  of  America,  to  be  paid  to  The  City  of  New  York,  or  to 
its  certain  attorney,  successors  or  assigns,  for  which  payment,  well  and  truly  to  be 
made,  we  bind  ourselves,  our  successors  and  our  several  and  respective  heirs,  execu- 
tors and  administrators,  jointly  and  severally,  firmly  by  these  presents. 

Sealed  with  our  seals.     Dated  this day  of 

one  thousand  nine  hundred  and  nine. 

Whereas,  the  above  bounden 

by  an  instrument  in  writing,  bearing  even  date  with  these  presents,  has  contracted 
with  The  City  of  New  York  to  furnish  all  the  materials  and  labor  for,  and  in  good, 
sufficient  and  workmanlike  manner,  construct  Hill  View  reservoir  and  portions  of 
Yonkers  and  Van  Cortlandt  siphons  in  the  City  of  Yonkers,  Westchester  county, 
New  York : 

Now,  Therefore,  the  condition  of   the   above   obligation  is  such,   that   if 

the     said 

shall  well  and  truly,  and  in  a  good,  sufficient  and  workmanlike  manner,  perform  the 
said  contract,  and  each  and  every  provision  therein  contained  on  his  part  to  be  done 
and  performed,  and  complete  the  same  in  accordance  with  the  terms  and  provisions 
therein  stipulated,  and  in  each  and  every  respect  comply  with  the  conditions  therein 
contained,  then  this  obligation  shall  be  void,  otherwise  it  shall  remain  in  full  force 
and  virtue. 

(SEAL) Contractor. 

(SEAL) Surety. 


The  following  is  more  extensive : 

F.  BOND 

Know  all  Men  by  These  Presents, 

That of 

hereinafter  called  the  Contractor  and 

and 

hereinafter  called  the  Sureties  are  held  and  firmly  bound  unto  The  City  of 
New  York,  hereinafter  called  the  City,  in  the  sum  of  forty  thousand  dollars  ($40,000) 
lawful  money  of  the  United  States  of  America,  to  be  paid  to  the  City,  for  which 
payment  well  and  truly  to  be  made  the  Contractor  and  the  Sureties  do  hereby  bind 
themselves  and  their,  and  each  of  their,  executors,  administrators,  successors  and 
assigns  firmly  by  these  presents,  as  follows:  The  Contractor  to  be  so  held  and 
bound  for  the  full  amount  of  the  said  sum  of  forty  thousand  dollars  ($40,000)  and 


BOND  18-5 

each  of  the  said  Sureties  to  be  so  held  and  bound  only  for  a  portion  of  said  sum  as 
follows : 

The  said 

for  the  sum  of 

dollars  ($ ) ;  the  said 

for  the  sum  of 

dollars  ($ ) ;  the  said 

for  the  sum  of 

dollars  ($ ) ;  and  the  said 

for  the  sum  of 

dollars  ($ ) 

In  Witness   Whereof,  The   Contractor   and  the   Sureties  have  hereunto* 
set  their  hands  and  seals  and  such  of  them  as  are  corporations  have  caused  their 
respective  seals  to  be  hereto  affixed  and  these  presents  to  be  attested  by  the  proper 
officers,  this day  of 1916. 

Whereas,  the  City  by  the  Public  Service  Commission  for  the  First  District 
(hereinafter  called  the  "Commission")  is  about  to  enter  into  a  contract  with  the 
Contractor  for  the  construction  by  the  Contractor  of  station  finish  for  that  portion 
of  a  Rapid  Transit  Railroad  known  as  Sections  Nos.  7  to  11,  inclusive,  of  Route 
No.  5,  in  the  Borough  of  Manhattan,  in  the  City  of  New  York ;  and 

Whereas,  The  City  is  about  to  enter  into  such  contract  with  the  Contractor 
upon  the  condition,  and  not  otherwise,  that  this  bond  shall  be  given  to  the  City,  and 
upon  the  faith  thereof, 

Now,  Therefore,  the  condition  of  the  foregoing  obligation  is  such  that  if 
the  Contractor  shall  faithfully  perform  all  the  conditions,  covenants  and  require- 
ments specified  and  provided  for  hi  said  contract,  then  this  obligation  shall  be  null 
and  void,  but  else  it  shall  remain  in  full  force  and  virtue. 

It  is  Expressly  Agreed  between  the  City  and  the  Sureties  (and  it  is  only 
upon  such  agreement  that  the  City  accepts  this  bond)  that  the  Sureties  will  and  do 
waive  any  and  every  notice  of  default  on  the  part  of  the  Contractor ;  that  they 
will  and  do  permit  the  City  to  extend  the  tune  of  the  Contractor  to  do  any  act ;  that 
no  omission  on  the  part  of  the  City  to  give  any  notice  of  extension  of  time  granted 
by  or  on  behalf  of  the  City  shall  be  availed  of  by  the  Sureties  or  any  of  them  as  a 
defence  upon  this  bond ;  that  the  Sureties  shall  not  set  up  or  have  any  defence  upon 
this  bond  by  reason  of  any  alteration  of  the  said  contract  unless  such  alteration  shall 
be  represented  by  a  formal  written  instrument  duly  executed  between  the  City  and 
the  Contractor  which  shall  have  been  duly  authorized  by  a  vote  of  the  Commission 
and  entered  into  without  the  consent  of  the  Sureties ;  and  that  in  case  of  such  altera- 
tion, however  made,  the  same  shall  be  a  defence  to  the  Sureties  only  to  the  extent 
of  the  actual  injury  or  damage  caused  to  the  Sureties  by  said  alteration. 

If  the  Contract  provides  for  changes  in  the  Contract,  and  covers  all 
requirements  upon  the  Contractor,  the  final  clause  appears  unnecessary. 
If  provisions  for  extension  of  time  are  considered  necessary  they  should 
be  made  a  part  of  the  Contract. 

A  clause  like  the  following  is  sometimes  added  to  the  Bond  : 

G.  And  the  surety  hereby  stipulates  and  agrees  that  no  change,  extension, 
alteration  or  addition  to  the  terms  of  the  Contract  or  Specifications  shall  in  any  wise 
affect  his  obligation  to  this  Bond. 


18-6  BOND 

The  Contract,  however,  should  provide  for  changes  and  corrections. 
If  there  are  extensions,  alterations,  or  additions  which  virtually  make  a  new 
Contract,  the  proper  way  is  to  secure  the  written  " consent"  of  the  surety. 
This  consent  will  be  to  a  specific  change  in  the  Contract,  and  ought  to  hold. 
It  might  well  be  a  question  whether  the  provision  shown  above  would  be 
effective  in  case  the  Contract  was  very  materially  changed,  to  the  extent, 
perhaps,  of  making  a  new  Contract  in  some  features. 

The  form  shown  below  has  points  both  of  similarity  and  of  difference 
in  comparison  with  the  other  forms  shown  : 


H.  BOND   TO   ACCOMPANY   THE   CONTRACT 

Know  all  Men  by  These  Presents, 

That  we, 

as  principal,  and  the 

duly  authorized  to  transact  business  in  Massachusetts,  and  having  an  office  at 

as  surety,  are  held  and  firmly  bound  unto  the  City  of  Boston,  in  the  sum  of 

dollars  ($ )  to  be  paid  the  City  of  Boston,  for  which 

payment,  well  and  truly  to  be  made,  we  bind  ourselves,  our  heirs,  executors  and 
administrators,  successors  and  assigns,  jointly  and  severally,  firmly  by  these 
presents. 

This  Obligation  is  upon  the  Condition  that  if  the  party  to  the  con- 
tract hereto  annexed,  other  than  the  City,  shall  faithfully  furnish,  keep  and  do 
everything  therein  required  of  the  party  on  his  part  to  be  furnished,  kept  and  per- 
formed, and  shall  also  pay  for  all  labor  performed  or  furnished,  and  for  all  materials 
used  in  the  carrying  out  of  said  contract,  and  shall  indemnify  the  City  and  the  Com- 
mission for  any  failure  so  to  do,  as  provided  in  Section  23,  Chapter  514  of  the  Acts 
of  1909  and  amendments  thereof,  then  this  obligation  shall  become  and  be  null  and 
void ;  otherwise  it  shall  be  and  remain  in  full  force  and  virtue. 

The  bond  is  to  remain  in  force  two  years  after  the  completion  of  the  contract 
and  if  legal  proceedings  are  then  pending  against  the  City  or  the  Commission  alleg- 
ing injury  to  person  or  property  in  the  performance  of  this  contract  or  have  then 
been  brought  by  the  City  or  the  Commission  against  the  Contractor  said  bond  shall 
remain  in  force  until  payment  to  the  City  or  the  Commission  of  the  amount  with 
interest  of  any  judgment  rendered  therein. 

In  Witness  Whereof,  we  hereunto  set  our  hands  and  seals  this 

day   of 

in  the  year  nineteen  hundred  and  sixteen. 

(SEAL) 

There  is  considerable  question  as  to  the  advisability  of  putting  any  time 
limit  on  the  Bond.  The  risk  is  mainly  a  function  of  the  size  and  quality 
of  the  Contract  rather  than  of  the  time  consumed  in  executing  it,  and  the 
charges  of  the  surety  company  are  properly  rated  accordingly.  As  has 
been  stated  the  premium  is  now  rated  upon  the  amount  of  the  Contract. 


BOND  18—7 

The  following  form  of  Bond  is  much  more  elaborate  than  any  of  the 
preceding  forms : 

7.  CONTRACTOR'S  BOND 

Know  all  Men  by  These  Presents, 

That  we as  principal, 

and as  surety, 

are  held  and  firmly  bound  unto  The  Sanitary  District  of  Chicago  in  the  penal  sum 
of  Three  Thousand  Dollars  ($3000)  lawful  money  of  the  United  States, 
for  the  payment  of  which  sum  of  money  well  and  truly  to  be  made,  we  bind  our- 
selves, our  heirs,  executors  and  administrators,  successors  and  assigns,  jointly  and 
severally,  firmly  by  these  presents. 

Sealed  with  our  hands  and  seals  and  dated  this 

day  of A.D.  191  . 

The  Condition  of  the  Above  Obligations  is  Such  that  whereas  the  above 

bounden  

has  entered  into  a  certain  contract  with  The  Sanitary  District  of  Chicago,  bearing 

date  the day  of A.D.  1916,  for  doing  all  the  work 

and  furnishing  all  the  materials,  tools,  labor,  appliances  and  appurtenances  neces- 
sary for  The  Furnishing,  Fabrication,  and  Delivery  of  the  Metal  Work  for 
the  Superstructure  of  a  Double  Track  Bridge  at  the  Crossing  of  the  Chicago 
and  Joliet  Electric  Railway  Over  the  Calumet-Sag  Channel  of  the  Sanitary 
District  of  Chicago  at  Lambert  Station,  hi  the  Township  of  Lemont,  County 
of  Cook,  State  of  Illinois. 

Now,  if  the  said 

shall  in  all  respects  well  and  truly  keep  and  perform  the  said  contract  on  his  part 
in  accordance  with  the  terms  thereof,  and  specifications  therein  contained  and  the 
plans  thereto  attached,  and  in  the  tune  and  manner  therein  prescribed,  and  further, 
shall  protect,  indemnify,  keep  and  save  harmless  The  Sanitary  District  of  Chicago 
against  all  liabilities,  judgments,  costs,  damages,  expenses  and  attorney's  fees,  which 
may  in  anywise  come  against  said  The  Sanitary  District  of  Chicago  in  consequence 
of  the  awarding  of  such  contract,  or  which  may  in  anywise  result  from  the  careless- 
ness or  neglect  of  said 

or  his  agents,  employees  or  workmen,  in  any  respect  whatsoever,  or  which  may 
result  on  account  of  any  infringement  of  any  patent  by  reason  of  the  materials, 
machinery,  processes,  devices  or  apparatus  used  or  furnished  in  the  performance  of 
said  contract,  and  moreover  shall  pay  to  said  The  Sanitary  District  of  Chicago  any 
sum  or  sums  of  money  determined  by  the  Engineer  to  be  due  said  The  Sanitary  Dis- 
trict of  Chicago  by  reason  of  any  failure  or  neglect  in  the  performance  of  said  con- 
tract, and  shall  pay  all  valid  claims  and  demands  whatsoever,  including  all  valid 
claims  and  demands  for  first  aid,  medical,  surgical  and  hospital  services  and  for 
compensation  for  accidental  injuries  or  deaths,  under  the  provisions  of  the  Act  of 
the  General  Assembly  of  the  State  of  Illinois  entitled  "An  Act  to  promote  the 
general  welfare  of  the  people  of  this  State  by  providing  compensation  for  accidental 
injuries  or  death  suffered  in  the  course  of  employment  within  this  State ;  providing 
for  the  enforcement  and  administering  thereof,  and  a  penalty  for  its  violation,  and 
repealing  an  Act  entitled  'An  Act  to  promote  the  general  welfare  of  the  people  of 
this  State  by  providing  compensation  for  accidental  injuries  or  death  suffered  in 
the  course  of  employment,'  approved  June  28, 1913,  in  force  July  1, 1913,  as  amended 


18-8  BOND 

by  an  Act  of  the  State  of  Illinois,  in  force  July  1,  1915,  which  may  accrue  to  each 

and  every  person  who  shall  be  employed  by  said 

in  or  about  the  performance  of  said  contract  or  which  shall 

accrue  to  the  beneficiaries  of  any  such  person,  then  is  this  obligation  to  be  null 
and  void,  otherwise  to  remain  in  full  force  and  effect. 

And  it  is  Hereby  Expressly  Understood  and  Agreed,  and  made  a  condition 
hereof,  that  any  judgment  rendered  against  said  The  Sanitary  District  of 
Chicago,  as  aforesaid,  in  any  suit  for  damages  occasioned  by  carelessness  or 

neglect   of  said 

or  his  agents,  employees  or  workmen  in  the  premises,  and  also  that  any  judgment  of 
any  court  or  award  of  any  Board  of  Arbitrators  or  of  the  State  Industrial  Board 
of  the  State  of  Illinois  rendered  against  said  The  Sanitary  District  of  Chicago  in  any 
suit  or  claim  arising  under  the  said  Act  of  the  General  Assembly  of  the  State  of 
Illinois,  approved  June  28,  1913,  in  force  July  1,  1913,  as  amended  by  an  Act  of  the 
General  Assembly  of  the  State  of  Illinois,  in  force  July  1,  1915,  relating  to  compensa- 
tion for  accidental  injuries  or  deaths  suffered  by  employees,  in  the  course  of  their 
employment,  when  notice  of  the  pendency  of  such  suit,  hearing  or  arbitration  shall 

have  been  given  said 

shall  be  conclusive  against  each  and  all  parties  to  this  obligation,  as  to  amount, 
liability  and  all  other  things  pertaining  thereto. 

(SEAL) 

(SEAL) 

(SEAL) 

(SEAL) 

Approved  as  to  form A.D.  191  . 


Assistant  Attorney. 
Attorney. 

It  will  hardly  be  profitable  to  extend  the  discussion  by  including  addi- 
tional forms. 

In  some  New  York  Contracts,  the  Contractor  is  allowed  to  deposit 
cash  or  securities  instead  of  filing  a  Bond.  A  Contractor  who  owns  suffi- 
cient securities  to  satisfy  the  Board,  is  thus  relieved  of  the  fee  to  the  surety 
company  while  the  City  is  fully  protected.  Such  a  provision  is  shown 
below. 

J.  Article  XXVIII.  The  Contractor  may  at  his  option  deposit  with  the 
Comptroller  in  lieu  of  said  bond  or  of  any  part  thereof,  an  equal  amount  in  cash  or  in 
value  of  securities.  f  If  securities  be  deposited  they  shall  be  securities  of  which  a 
schedule  shall  be  hereto  annexed,  entitled  Schedule  of  Securities,  and  there  shall  be 
deposited  with  them  the  written  approval  of  the  Commission  which  it  shall  give 
when  satisfied  as  to  the  character  thereof.  In  case  any  of  the  securities  so  deposited 
shall,  in  the  opinion  of  the  Commission,  at  any  time  cease  to  be  of  the  character  of 
securities  in  which  the  savings  banks  of  the  State  of  New  York  are  then  authorized 
by  law  to  invest  moneys,  or  shall,  in  the  opinion  of  the  Commission,  at  any  time 
become  of  less  value  than  the  value  stated  for  it  or  them  in  the  said  schedule,  — 
then  within  ten  days  after  notice  to  the  Contractor  of  the  objection  of  the  Commis- 


BOND  18-9 

sion,  the  Contractor  shall  either  substitute  therefor  securities  which  shall  be  ap- 
proved by  the  Commission  as  of  the  character  aforesaid  and  as  being  of  at  least  the 
value  of  the  former  securities  to  which  the  Commission  shall  have  objected  as  such 
value  was  originally  stated  in  the  said  schedule,  or  shall  deposit  with  the  Comp- 
troller in  cash  the  amount  of  such  value  of  such  former  securities  as  so  originally 
stated.  In  case  the  Contractor  shall  not  within  such  ten  (10)  days  or  such  further 
time,  if  any,  as  the  Commission  may  grant  substitute  such  new  securities  or  make 
such  deposit  of  cash,  he  shall,  if  the  Commission  so  elect,  be  deemed  to  be  in  default 
in  the  performance  of  his  obligation  under  this  contract ;  and  in  addition  to  any  and 
all  other  remedies  against  the  Contractor  or  his  sureties,  the  Commission  may 
require  the  Comptroller  to  deduct  from  any  moneys  then  due  or  which  thereafter 
may  become  due  to  the  Contractor  under  this  contract,  the  amount  of  the  original 
valuation  of  such  securities  objected  to,  and  to  hold  such  amount  in  lieu  of  such 
securities,  as  if  part  of  the  original  deposit  or  as  if  deposited  with  the  Comptroller 
aforesaid,  and  such  amount  shall  in  such  case  be  deemed  to  be  paid  to  the  Con- 
tractor upon  this  contract.  The  securities  so  objected  to  shall  upon  such  substitu- 
tion of  securities  or  deposit  of  cash  in  lieu  thereof  be  returned  to  the  Contractor. 

The  City  shall  from  time  to  time  collect  all  interest,  dividends  or  other  profits 
or  income  on  any  securities  deposited  by  the  Contractor,  and  shall,  when  and  as 
collected,  pay  the  same  to  the  Contractor.  If  the  securities  are  in  the  form  of 
coupon  bonds  the  coupons  as  they  respectively  become  due  shall  be  delivered  to  the 
Contractor.  If  the  deposit  be  made  in  cash,  interest  shall  be  paid  to  the  Contractor 
at  the  average  rate  of  interest  received  by  the  City  on  its  bank  balances  during  such 
period.  Provided,  however,  that  the  Contractor  shall  not  be  entitled  to  interest, 
dividends  or  other  profits  or  income  on  any  securities  the  proceeds  of  which  shall 
be  used  or  applied  as  hereinafter  provided. 

Article  XXIX.  The  said  deposit,  whether  in  cash  or  securities,  in  the  form  and 
as  the  same  shall  at  any  time  be,  shall  be  security  for  the  faithful  performance  by 
the  Contractor  of  all  the  covenants,  conditions  and  requirements  specified  and 
provided  for  in  this  contract.  In  case  of  any  default  on  the  part  of  the  Contractor 
in  such  performance,  and  in  the  further  case  that  the  City  shall  for  or  by  reason  of 
such  failure,  whether  by  reason  of  employment  of  another  contractor  or  contractors 
or  otherwise,  incur  or  become  liable  for  expense  through  such  default  as  hereinafter 
provided,  then  the  Comptroller  shall  forthwith  pay  or  apply  to  the  use  of  the  City 
the  amount  of  such  expense  out  of  the  said  deposit  in  cash  or  securities  or  out  of 
the  portion  of  the  deposit  remaining  at  the  time. 

Article  XXX.  The  Comptroller  shall,  upon  the  requirement  of  the  Commis- 
sion, in  order  to  make  such  payment  or  application  to  the  use  of  the  City,  sell  at 
public  auction  in  the  City  of  New  York  any  of  the  securities  which  may  then  con- 
stitute part  of  such  deposit  upon  notice  to  be  published  in  three  daily  newspapers, 
the  first  publication  to  be  not  less  than  ten  (10)  days  before  the  sale  and  such 
.  publication  to  be  made  three  tunes  within  such  ten  (10)  days.  Any  such  sale  shall 
be  adjourned  from  time  to  time  if  requested  by  the  Commission.  The  Comptroller 
shall,  upon  the  requirement  of  the  Commission,  deduct  from  the  proceeds  of  any 
such  sale,  all  expenses  thereof  and  of  such  advertisement,  and  pay  and  apply  to  the 
use  of  the  City  so  much  of  the  residue  of  such  proceeds  as  may  be  necessary  for  the 
purpose  aforesaid.  And  the  Contractor  within  ten  (10)  days  after  notice  from  the 
Commission  so  to  do  shall  (unless  the  time  be  extended  by  the  Commission)  by 
further  deposit,  according  to  the  requirement  of  the  Commission,  of  money  or 
securities  of  the  character  aforesaid  approved  by  the  Commission  restore  the  said 


18-10  BOND 

deposit  with  the  Comptroller  to  the  full  amount  originally  required.  In  addition 
to,  or  in  lieu  of,  the  sale  above  provided  for,  the  Commission  may,  in  the  name  of 
and  in  behalf  of  the  City,  bring  any  appropriate  suit  or  proceeding  in  any  proper 
court  to  enforce  the  lien  and  claim  of  the  City  in  and  upon  the  said  deposit,  whether 
such  deposit  be  in  money  or  securities. 

Some  forms  provide  that  a  surety  Bond  shall  be  furnished  instead  of  the 
certified  check,  and  the  following  form  has  been  used : 

K.  PROPOSAL   BOND 

In  consideration  of  the  premises,  and  of  One  Dollar  to  us  and  each  of  us  in 
hand  paid  by  The  City  of ,  and  of  other  good  and  valuable  considera- 
tions, the  receipt  whereof  is  hereby  acknowledged  : 

We,  the  undersigned,  jointly  and  severally,  consent  and  agree,  that  if  the  con- 
tract for  which  the  preceding  bid  or  proposal  is  made  be  awarded  to  the  person  or 
persons  making  the  same,  we  will,  upon  its  being  so  awarded,  become  bound  as  his 
or  their  or  its  sureties  for  the  faithful  performance  of  said  contract ;  and  if  the  said 
person  or  persons  shall  omit  or  refuse  to  execute  such  contract  and  give  the  proper 
security  within  ten  days  after  written  notice  that  the  same  is  ready  for  execution, 
is  so  awarded,  we  will  pay,  without  proof  of  notice  or  demand,  to  the  City,  any 
difference  between  the  sum  to  which  such  person  or  persons  would  be  entitled  upon 
the  completion  of  such  contract,  and  the  sum  which  the  City  may  be  obliged  to  pay 
to  the  person  or  persons  to  whom  the  contract  shall  be  awarded  at  any  subsequent 
letting ;  the  amount  in  each  case  to  be  calculated  upon  the  estimated  quantities  of 
work,  labor  and  materials  by  which  the  bids  are  tested ;  provided,  however,  that  the 
estimated  amount  under  the  subsequent  letting  be  greater. 

In  Witness  Whereof,  we  have  hereunto  set  our  hands,  this 

day  of one  thousand  nine  hundred  and 

(Note.  Each  and  every  surety  must  sign  below  and  state  his  place  of  business 
or  residence.) 


No  seal  is  shown  here ;  apparently  reliance  is  placed,  in  this  form,  upon 

"One  Dollar and  other  good  and  valuable  considerations"  as  the 

consideration  of  the  agreement,  while  in  the  other  forms  reliance  is  placed 
upon  the  seal. 

In  the  form  above  there  appears  to  be  no  limit  to  the  liability  incurred 
by  the  sureties,  and  most  surety  companies  would  probably  be  at  some  loss 
as  to  what  charges  to  make  for  furnishing  such  a  Bond. 

Another  form  somewhat  similar  in  its  general  features  provides  in 
case  of  failure  to  sign  the  Contract  and  furnish  Bond : 

L.  We  bind  ourselves, to  pay the  sum  of thousand  dol- 
lars ($ )  as  liquidated  damages  to  reimburse  said  Board  for  expenses  or 

delays  incurred  in  making  another  letting  for  the  construction  of,  etc and 

we  do  further  bind  ourselves  to  pay  to  said  Board,  the  difference,  not  exceeding 
thousand  dollars  ($ )  between  the  amount  of  the  accepted  pro- 


BOND  18-11 

posal  of  the  undersigned  bidder,  and  the  amount  for  which  said  Board  may  procure 
and  accept  a  bid  or  proposal  from  other  parties  to  do  said  work,  if  the  latter  amount 
be  in  excess  of  the  amount  stated  in  the  proposal  of  the  undersigned  bidder. 

The  criticism  of  both  of  the  above  is  as  to  substance  rather  than  as  to 
form.  Most  Engineers  and  most  Contractors  would  probably  prefer  that 
the  Bond  should  cover  a  specific  sum  just  as  the  certified  check  does,  to  be 
forfeited  in  case  of  failure  on  the  part  of  the  Contractor  to  sign  the  Contract 
and  furnish  the  Contract  Bond.  The  general  practice  is  in  harmony  with 
this  view. 

If  a  Bond  of  this  sort  is  to  be  furnished  it  may  simply  and  properly  be 
in  the  following  form  similar  to  that  of  the  Contract  Bond  used  by  the 
Cambridge  Bridge  Commission,  and  that  approved  by  the  American  Rail- 
way Engineering  Association. 

M.  PROPOSAL   BOND 

Know  all  Men  by  These  Presents: 

That  the  undersigned 

are  held  and  bound  unto  the  (name  the  Board  or  Company)  in  the  sum  of 

dollars,  lawful  money  of  the  United  States 

of  America,  to  be  paid  to  the  said its  suc- 
cessors and  assigns,  to  which  payment  the  undersigned,  jointly  and  severally,  bind 
themselves,  their  heirs,  executors,  administrators,  successors  and  assigns. 

The  condition  of  this  obligation  is  such  that  in  case  the  Proposal  made  by 

Contractor  for  (briefly  indicate  the  work),  to  be  opened 

A.D.  19 .  . ,  shall  be  accepted  by  (name  the  Board  or  Com- 
pany), if Contractor  shall  sign  the  Contract  and  furnish  the 

Contract  Bond  in  all  respects  as  provided  and  agreed  in  said  Proposal,  this  obliga- 
tion shall  become  of  no  effect ;  otherwise  it  shall  continue  in  full  force. 

Signed,  sealed  and  delivered  this day  of A.D.  19  . . 

Attest : 

(SEAL) 


CHAPTER  XIX 
SPECIFICATIONS 

As  has  been  stated  previously,  it  is  not  always  possible  to  draw  a  clear 
dividing  line  between  Contract  provisions  and  Specifications.  It  has 
also  been  stated  that  the  Specifications  are  sometimes  bodily  included 
within  the  limits  of  the  Contract,  and  are  sometimes  contained  in  a  con- 
temporary document  which  by  express  provision  is  made  a  part  of  the 
Contract,  as  the  plans,  in  their  turn,  are  made  a  part  of  the  Contract  or 
of  the  Specifications. 

Strictly,  as  to  form,  the  Contract  should  be  an  agreement  and  the 
Specifications  not.  The  latter  should  specify  qualities  of  materials, 
methods,  and  processes,  and  the  quality  or  condition  of  any  resulting 
structure.  In  fprm,  the  Specifications  should  state  that  a  certain  material 
shall  have  specified  qualities,  and  not  that  the  Contractor  shall  furnish 
such  material  of  specified  qualities ;  or  that  a  process  shall  be  carried  out 
in  a  certain  way  or  under  certain  conditions  rather  than  that  the  Con- 
tractor shall  conduct  the  process  in  this  particular  way;  or  it  should 
provide  that  the  structure  shall  have  specified  qualities.  The  form,  how- 
ever, is  less  important  than  the  substance. 

For  a  general  statement  the  Contract  should  cover  an  agreement  to 
do  work,  and  the  Specifications  should  apply  to  a  particular  class  of  work 
as  well  as  to  the  particular  work  in  hand.  Practically  it  is  often  difficult 
not  to  overrun  the  theoretical  line  between  the  two  on  one  side  or  the  other. 

Clearness  of  description  is  of  the  utmost  importance.  For  this  a  clear 
vision  of  what  is  wanted  is  the  first  requisite.  To  this  must  be  added 
sufficient  ability  in  the  use  of  language  to  make  clear  to  others  what  the 
Engineer  sees  clearly.  An  able  Contractor  has  stated  that  his  training  in 
descriptive  geometry  was  of  great  value  to  him  because  it  permitted  him 
to  visualize  a  piece  of  work. 

There  are  several  mediums  of  expression,  among  them :  spoken  words, 
writings,  drawings,  and  models,  all  of  which  may  at  times  be  used  to 
describe  work  to  be  done.  Specifications  in  writing,  and  drawings  are 
regularly  used  to  express  what  the  work  is  to  be,  or  perhaps  how  it  is  to 
be  done.  For  some  classes  of  work,  models  are  well-nigh  essential ;  and 

19—1 


19—2  SPECIFICATIONS 

the  frequent  use  of  moving  pictures  for  such  purposes  is  by  no  means 
improbable  in  the  early  future.  They  have,  however,  the  disadvantage, 
ordinarily,  of  not  being  available  for  frequent  examination. 

Specifications  should  be  logically  arranged,  partly  for  clearness,  partly 
so  that  two  clauses  differently  worded  shall  not  be  written  covering  in 
whole  or  in  part  the  same  thing.  Otherwise  the  meaning  may  be  made 
obscure,  and  while  the  decision  of  the  Chief  Engineer  may  in  general  be 
final  as  to  the  meaning  of  a  clause  so  far  as  technical  questions  are  involved, 
the  court,  if  appealed  to,  will  not  allow  its  jurisdiction  to  be  ousted,  cer- 
tainly as  to  whether  a  breach  of  contract  has  occurred,  and  commonly 
as  to  the  meaning  of  a  Contract  which  is  to  be  decided.  A  Contract  means 
what  it  says  and  the  Chief  Engineer  cannot  directly  change  it,  or  mis- 
interpret it,  which  is  the  equivalent  of  changing  it.  The  quantities  of 
work  or  the  quality  of  construction  are  matters  wherein  the  decision  of 
the  Chief  Engineer  will  not  be  disturbed  unless  for  lack  of  good  faith  on 
his  part,  as  has  been  stated. 

Specifications  and  drawings  not  only  express  what  work  is  to  be  done 
but  they  also  state  in  many  cases  existing  conditions  as  to  soil  or  founda- 
tions or  borings,  or  other  facts  necessary  for  the  Contractor  for  an  intelli- 
gent bid. 

Upon  the  Company  or  the  City,  properly  devolves  the  duty  of  determin- 
ing the  conditions  as  to  soil,  foundations,  and  other  matters  upon  which 
the  construction  depends  and  upon  which  the  bids  must  be  based.  It  is 
uneconomical  to  require  that  each  Contractor  shall  make  borings  or  ex- 
tensive surveys  or  investigations  to  determine  conditions,  and  this  should 
not  be  expected  of  him.  A  failure  to  know  conditions  means,  in  the  long 
run,  bids  from  the  Contractors  high  enough  to  cover  risk,  and  it  is  good 
economic  law  that  the  Company  is  the  gainer  from  reducing  the  Con- 
tractor's risk  to  a  minimum. 

The  Company  or  the  City  oftentimes  refuses  or  fails  to  provide  money 
or  opportunity  to  make  the  proper  preliminary  investigations  of  conditions 
necessary  both  for  adequate  designing  and  for  intelligent  bidding.  Friction 
and  lawsuits  are  among  the  probable  sequences.  The  Engineer  should 
exercise  great  care  in  stating  facts  or  conditions  whether  in  the  Specifica- 
tions and  drawings,  or  in  the  Information  for  Bidders.  He  should  state 
only  facts  and  not  conclusions  derived  from  them.  If  borings  have  de- 
termined certain  ledge  elevations,  these  should  be  shown.  Drawing 
contours  based  on  these  as  probable  elevations  of  ledge  is  unwise;  let 
the  Contractor  do  this  if  he  cares  to,  or  let  him  rely  on  the  elevations 
shown. 

With  relation  to  Specifications  and  drawings,  however,  it  is  sometimes 
provided : 


SPECIFICATIONS  19-3 

Bidders  or  their  authorized  agents  are  expected  to  examine  the  maps  and  draw- 
ings in  this  office,  which  are  open  to  their  inspection,  to  visit  the  locality  of  the 
work,  and  to  make  their  own  estimates  of  the  facilities  and  difficulties  attending 
the  execution  of  the  proposed  contract,  including  local  conditions,  uncertainties 
of  the  weather,  and  all  other  contingencies. 

In  a  case  where  this  provision  had  been  made,  the  United  States  Supreme 
Court  rendered  a  decision  in  favor  of  the  Contractor  and  against  the  United 
States  as  follows : 

"Where  the  specifications  for  repair  of  a  dam  say  that  the  existing  dam  is  now 
backed  with  broken  stone,  sawdust  and  sediment,  and  it  is  actually  backed  with 
solid  crib  work,  the  Government  must  pay  the  increased  cost  of  removal,  not- 
withstanding other  provisions  in  the  specifications  notifying  bidders  to  visit  the 
locality,  estimate  difficulties,  and  obtain  information  necessary  for  an  intelligent 
proposal.  The  Contractor  has  a  right  to  rely  on  a  positive  assertion  of  such  a 
fact  without  an  investigation  to  prove  its  falsity. 

"It  was  a  positive  and  material  representation  as  to  a  condition  presumably 
within  the  knowledge  of  the  Government,  and  upon  which,  in  the  absence  of  any 
other  provision  or  warranty,  the  plaintiffs  had  a  right  to  rely." 

The  Specifications  put  some  burden  upon  the  Contractor  to  learn 
conditions  and  the  lower  court  thought  that  this  relieved  the  Government. 
The  Supreme  Court  on  the  facts  in  this  case  thought  otherwise  and  granted 
relief  to  the  Contractor. 

In  another  case  as  stated  by  the  court : 

"The  specifications  provided :  'The  material  to  be  excavated  as  far  as  known, 
is  shown  by  borings,  drawings  of  which  may  be  seen  at  this  office,  but  bidders 
must  inform  and  satisfy  themselves  as  to  the  nature  of  the  material.' 

"The  material  actually  to  be  excavated  consisted  largely  of  stumps  below  the 
surface  of  the  earth,  buried  logs,  or  cemented  sand  and  gravel,  none  of  the  sand 
or  gravel  being  described  in  said  drawings  as  cemented,  and  sandstone  conglomer- 
ate; and  such  materials  were  far  more  difficult  and  expensive  to  penetrate  and 
excavate  than  ordinary  sand  and  gravel  as  described  in  the  drawings. 

"The  claimants  were  forced  to  rely  wholly  on  the  information  furnished  them, 
the  time  not  being  sufficient  to  permit  them  to  make  their  own  borings,  and  they 
believed  the  information  furnished  them  to  be  accurate  and  reliable." 

In  this  case  stumps  and  other  unfavorable  material  had  actually  been 
found  by  the  borings,  but  were  not  shown  on  the  plans. 

The  lower  court,  in  this  case  also,  decided  in  favor  of  the  Government 
but  the  Supreme  Court  overruled  their  decision  in  favor  of  the  Contractor. 
Whether  much  importance  attached  to  the  fact  that  time  was  not  available 
for  the  Contractor  to  make  borings  may  well  be  doubted. 

Where  the  Contract  and  Specifications  make  tbe  decision  of  the  Chief 
Engineer  final,  it  apparently  is  not  good  law  or  morals  to  deny  the  Con- 


19-4  SPECIFICATIONS 

tractor  the  right  to  question  the  decision  of  the  Chief  Engineer  and  at  the 
same  time  require  the  Contractor  to  question  statements  of  fact  within 
the  knowledge  and  functions  of  the  Chief  Engineer.  It  is  not  altogether 
improbable  that  at  some  future  time  a  court  will  hold  substantially  in  the 
following  form,  that  where  the  decision  of  the  Chief  Engineer  is  made 
final,  his  position  has  so  far  the  fiduciary  quality  that  it  will  amount  to 
constructive  fraud  for  him  to  give  or  withhold  information  as  to  material 
facts  by  which  the  Contractor  is  reasonably  misled  to  his  disadvantage 
either  in  making  his  bid  or  handling  his  work. 

In  another  case  which  did  not  go  to  suit,  a  clause  read : 

The  said  Contractors  agree  that  they  shall  be  accountable  for  the  full  per- 
formance of  this  contract,  and  by  signing  hereof  admit  that  the  plans,  elevations, 
sections,  specifications  and  parts  before  referred  to  are  sufficient  for  their  intended 
purpose  of  doing  the  said  work,  and  that  the  work  can  be  successfully  executed  in 
accordance  therewith,  without  any  additional  or  extra  work  other  than  that  set 
forth  thereby  or  necessarily  inferred  to  be  done  from  the  general  nature  and  tend- 
ency of  the  plans,  drawings  and  Specifications  aforesaid,  upon  a  fair  and  liberal 
construction  thereof. 

The  actual  conditions  were  found  in  one  feature  to  be  materially 
different  from  those  shown  on  the  plans,  and  the  cost  of  the  work  was 
much  increased  in  consequence.  There  were  in  other  matters  hardships 
for  the  Contractor  not  due  to  information  furnished,  and  for  which  the 
Contractor  was  legally  responsible,  and  the  Contractor's  lawyer  thought 
that  in  view  of  the  above  clause,  the  Contractor  did  not  have  a  good  case 
so  that  a  friendly  adjustment  resulted.  Whether  the  decisions  of  the 
United  States  Supreme  Court  quoted  above  would  cover  this  case  is  some- 
what doubtful.  The  clause  above  is  in  some  ways  more  stringent  than 
that  quoted  in  the  decision  referred  to.  Nevertheless,  a  reasonable  in- 
terpretation would  be  that  the  Contractor's  agreement  that  the  plans 
were  sufficient  for  their  intended  purpose  for  doing  the  work  and  that 
the  work  could  be  successfully  executed,  was  based  upon  the  facts  shown 
on  the  plans,  facts  upon  which  the  Contractor  had  a  right  to  rely.  The 
Contractor's  agreement  apparently  covered  "  plans "  in  the  sense  of 
methods  and  results  and  did  not  refer  to  the  accuracy  of  the  map  or  "  plan  " 
in  showing  existing  conditions,  and  to  this  extent  the  Company  would  be 
responsible.  Whether  the  court  would  accept  this  interpretation  is  un- 
certain, but  not  at  all  improbable. 

This  provision  occurs  in  the  Specifications  for  sewer  construction  in 
one  of  our  large  cities : 

Samples  of  borings  made  with  a  four-inch  hand  auger,  are  on  file  in  the  En- 
gineer's office.  The  results  are  plotted  on  the  profiles  for  the  information  of  the 


SPECIFICATIONS  19-5 

Contractor,  but  are  not  guaranteed.  The  Contractor  must  satisfy  himself  re- 
garding the  character  or  amount  of  peat,  clay,  sand,  quicksand,  gravel,  glacial 
drift,  rock,  and  all  other  material  to  be  encountered  and  work  to  be  performed. 

It  certainly  is  impracticable  for  Contractors  to  secure  this  information. 
It  is  doubtful  whether  permits  would  be  granted  to  ten  or  twenty  Con- 
tractors to  repeat  the  borings  in  a  business  street  of  a  large  city  or  on 
private  land  traversed.  The  information  is  peculiarly  within  the  knowl- 
edge of  the  City,  and  the  courts  might  properly  rule  that  the  Contractor 
had  a  right  to  rely  on  it.  In  the  United  States  case  cited  above,  the 
Engineer  knew  that  the  borings  shown  were  incomplete  and  misleading, 
but  that  probably  was  not  a  controlling  consideration  in  the  decision. 

Another  Specification  for  important  work  states: 

Wash  borings  and  diamond  drill  borings  have  been  made  at  the  site  of  the  work. 
These  borings  were  made  in  the  usual  manner  and  with  reasonable  care  substantially 
at  the  places  and  to  the  depths  shown  on  the  plans.  Samples  of  material  obtained 
from  the  borings  and  cores  obtained  by  drilling  have  been  preserved  and  labelled 
and  can  be  seen  at  the  office  of  the  Directors.  From  the  results  of  the  borings  and 
samples  of  material  obtained  therefrom,  lines  of  material  and  elevations  of  rock 
have  been  delineated  on  the  plans,  but  there  is  no  expressed  or  implied  agreement 
that  the  surface  of  the  rock  or  the  character  of  the  material  is  even  approximately 
correct.  Bidders  should  take  into  account  the  possibility  that  the  location  of  the 
surface  of  the  ledge  rock  and  the  character  of  the  overlying  material,  or  other 
conditions  affecting  the  cost  or  quantities  of  work  may  differ  from  the  indications 
on  the  plans. 

This  clause  is  so  strong  that  it  probably  would  be  sustained  by  the 
courts.  But  in  a  case  like  this,  only  the  facts  found  by  the  borings  should 
have  been  shown,  and  the  "  lines  "  should  have  been  omitted. 

The  evident  intent  of  the  Directors  was  that  the  Contractors  should 
rely  upon  this  information  in  making  their  bids,  and  the  disclaiming  of 
all  responsibility  for  the  facts  shown  might  fairly  be  interpreted  as  a 
notice  to  the  bidders  that  every  technicality  would  be  availed  of  by  the 
Directors  during  the  execution  of  the  Contract. 

An  additional  clause  in  the  same  Specifications  reads : 

For  the  purpose  of  obtaining  as  much  information  as  possible  hi  regard  to  the 
meaning  of  the  borings,  the  Directors  have  employed  an  experienced  geologist  to 
interpret  the  results.  The  report  of  the  geologist  is  on  file  at  the  office  of  the 
Directors  where  it  may  be  consulted  by  intending  bidders,  but  there  is  no  expressed 
or  implied  agreement  that  the  interpretation  given  by  him  is  even  approximately 
correct. 

As  to  the  clause  above,  there  is  no  reason  why  the  Directors  should 
assume  any  responsibility  for  the  opinions  or  interpretation  of  the  geologist 
and  the  clause  above  seems  proper.  It  is  to  be  hoped,  however,  that  the 


19-6  SPECIFICATIONS 

geologist  was  not  notified  that  there  was  no  agreement  that  the  facts  on 
which  he  based  his  opinions  and  interpretation  were  even  approximately 
correct. 

In  general,  Specifications  should  cover  qualities  of  materials  and 
resulting  construction,  leaving  the  Contractor  as  free  as  possible  as  to 
methods  of  handling  the  work.  Nevertheless,  methods  are  at  times  and 
in  cases  of  the  very  essence  of  the  work,  and  must  be  specified.  A  com- 
mission of  engineers  formulated  a  method  for  constructing  the  Detroit 
River  Tunnel.  Contractors'  bids  were  invited  upon  that  method,  and 
also  on  any  alternate  methods  suggested.  The  method  already  formu- 
lated received  the  lowest  bids  and  that  method  became  of  the  essence  of 
the  Contract.  Excavation  in  bad  materials  such  as  quicksand  or  muck, 
or  under  heavy  buildings  must  be  handled,  in  many  cases,  in  specified 
ways  to  avoid  risk  of  damage.  The  Engineer,  however,  should  specify 
methods  only  so  far  as  necessary  to  secure  proper  results.  He  should 
understand  further  that  the  Company  will  be  responsible  for  any  resulting 
damage  which  results  from  the  method  rather  than  from  any  lack  of  skill 
or  care  in  carrying  it  out. 

It  is  sometimes  specified  : 

All  materials  of  whatever  nature  required  in  the  construction  of  the  work  shall 
be  new  and  of  the  best  quality  and  of  the  best  fitted  for  the  special  use  intended. 

This  is  easy  to  write  and  doubtless  legal,  but  for  most  Contracts  not 
economical.  A  former  Chief  of  Engineers  of  the  United  States  Army  felt 
at  one  time  that  his  most  useful  occupation  was  writing  Specifications. 
Possibly  he  was  wrong  to  the  extent  that,  as  a  matter  of  organization,  he 
should  have  selected  one  of  his  higher  subordinates  for  this  duty.  The 
function  of  the  Engineer,  both  in  making  the  design  and  in  writing  the 
Specifications,  is  to  use  the  materials  which  are  adapted  to  the  purpose, 
and  to  specify  the  best  when  essential,  but  other  than  the  best  where 
satisfactory  results  will  be  obtained  at  less  cost,  maintenance  and 
operation  being  given  due  consideration.  A  high  order  of  ability  is  neces- 
sary to  do  this,  but  modern  economic  engineering  requires  it. 

The  Specifications  should  be  clear,  exact,  and  sufficient,  having  in  mind 
that  they  must  serve  as  a  guide  not  only  to  the  Contractor,  but  also  to 
the  Resident  Engineer  and  to  the  inspectors.  If  inexact,  and  the  Chief 
Engineer  afterwards  specifies  further  requirements  to  secure  exactness,  a 
question  may  arise  as  to  whether  this  amounts  to  reading  into  the  Contract 
a  provision  not  originally  contained  therein,  and  a  lawsuit  may  result. 
The  Chief  Engineer  cannot  add  to  or  take  away  from  the  Contract,  and  the 
court  will  interpret  the  Contract.  A  question  has  arisen,  in  specifying  the 
proportions,  such  as  1:2:4,  by  volume  for  concrete,  whether  this  state- 


SPECIFICATIONS  19-7 

ment  is  sufficiently  explicit  as  it  fails  to  fix  the  method  of  measurement. 
If  a  later  requirement  be  made  by  the  Chief  Engineer  as  to  method,  it 
may  be  found  that  this  is  contrary  to  common  custom  and  lead  to  suit 
and  an  award  of  damages. 

The  proper  course  is  to  demand  a  rigid  interpretation  of  the  Specifica- 
tions, which  ought  to  be  drawn  as  a  standard  for  the  work  to  be  done,  and 
not  as  an  ideal  from  which  to  let  down.  Specifications,  well  drawn  and 
impartially  enforced,  leave  no  room  for  suspicion  of  favoritism.  In  a  Con- 
tract required  by  statute  or  ordinance  to  be  advertised  and  let  to  the 
lowest  bidder,  the  law,  properly  interpreted,  demands  that  the  work  shall 
be  performed  according  to  the  terms  of  the  Specifications.  A  competent 
Engineer,  however,  will  seldom  go  out  of  his  way  to  measure  the  dimensions 
of  stone  better  fitted  than  the  average  used  and  required,  to  see  whether 
every  measurement  is  fully  up  to  standard.  If  directly  appealed  to  by  a 
workman,  however,  he  can  do  no  otherwise  than  to  insist  upon  any  meas- 
urement or  other  requirement  specified. 

The  terms  "  or  as  otherwise  directed  "  and  "  unless  otherwise  directed  " 
which  occur  in  some  Specifications  may  be  necessary  in  some  cases,  or  may 
be  quite  harmless  in  others.  It  may  happen,  however,  that  such  a  quali- 
fication, if  put  in  force,  will  mean  materially  increased  cost  to  the  Con- 
tractor, who  presumably  will  make  his  price  higher  to  correspond  when 
such  a  term  exists.  Where  conditions  allow,  the  Engineer  in  drafting 
Specifications  should  determine  what  will  be  needed  and  fairly  and  clearly 
state  it.  The  Contractor  has  a  legal  right  to  know  what  his  work  is  to 
be,  so  far  as  this  is  possible. 

It  is  not  intended  that  the  subject  of  Specifications  shall  be  extensively 
treated  here  or  treated  aside  from  its  legal  features ;  this  is  a  matter  of 
technical  engineering.  There  are  standard  Specifications  for  very  many 
classes  of  construction,  and  these  may  be  found  in  the  records  of  various 
associations  or  societies.  The  subject  of  Specifications  has  also  received 
attention  in  various  other  places.  An  extensive  treatment  of  the  subject 
may  be  found  in  a  book  published  in  1916  on  "  Contracts,  Specifications, 
and  Engineering  Relations,"  by  Daniel  W.  Mead,  where  about  260  pages 
are  devoted  to  Specifications,  including  an  extensive  bibliography. 


INDEX 


Abstract  of  title,  6—9. 
Acceptance : 

by  carrier,  11 — 9. 

negotiable  instruments, 
10—2,  15,  33. 

of  offer,  3 — 2. 

of  work,  16 — 77. 

sales,  9 — 8,  14. 
Accident,  equity,  6 — 8. 
Account,  equity,  6 — 15. 
Accounts  available  to  engineers, 

17—19. 
Acknowledgment : 

contracts,  1&— 4,  17—22. 

deeds,  6—8. 

Additional  contract  forms,  17 — 1-45. 
Advertisement,  13 — 1-17. 

bids  rejected,  13—9,  16,  17. 

bond,  13—2,  9,  11-15. 

brief  form,  13 — 10. 

check  certified  by  bank  cashier, 
13—14. 

competition,  13 — 5-7. 

deposit  for  plans,  13 — 17. 

headings,  13 — 7,  8. 

legal  requirements,  13 — 5-7. 

printed  forms  required,  13 — 11,  12. 

sample  advertisement,  13 — 8. 

special  provisions,  13 — 9,  16. 

time  of  doing  work,  13 — 16. 

why  advertise,  13 — 5. 
Agency,  8 — 1-7. 

authorization,  8 — 2,  4. 

creation,  8 — 2. 

delegation  of  authority,  8 — 5. 

duty  of  principal,  8 — 6. 

minor,  8 — 3. 

necessity,  8 — 3. 

principal  bound,  8—4. 

principal  certain,  8 — 3. 


Agency —  Continued. 

ratification,  8 — 2. 

responsibility  of  third  party,  8 — 6. 

termination,  8 — 7. 
Agent,  8—2-6. 

accounting,  6 — 15. 

duty  to  principal,  8 — 6. 

kinds,  8 — 4. 

liability,  8—2,  5. 

negotiable  instruments,  10 — 14. 

vs.  servant,  8 — 1. 
Agreement,  3 — 1. 

forms,  16 — 10. 

texts,  16—10,  17—23,  33. 

partnership,  7 — 1. 

voluntary,  3 — 4. 

Annulment  of  contract,  16 — 67,  70. 
Appeal,  1—13. 
Appearance,  1 — 11. 
Arbitration,  16—51,  17 — 44. 
Architect : 

compensation,  12 — 2. 

plans,  ownership,  12 — 2. 

standard  contract  forms, 

17—33-45. 

Assignment,  equity,  6 — 7. 
Award  of  contract,  7 — 26, 13 — 6, 
15—13. 


),  11—12. 
Bailment,  4—5,  S— 19. 
Bids  and  bidders,  see  proposal. 
Bill  of  lading,  10—2,  11—9. 
Bond,  18—1-11. 

cash  in  lieu  of,  18 — 8. 

contract,  13—9,  11-15. 

corporation,  7 — 13. 

information  for  bidders, 
6—8,  14—2. 

long  contract  form,  18 — 3-8. 


INDEX 


Bond —  Continued. 

proposal,  13—12-15, 1&— 3,  11, 
18—10. 

railroad,  11 — 1. 

short  contract  form,  18 — 1. 

text  as  to,  16—17,  17—29,  38. 
Borings,  14—12,  15,  19—2-5. 
Boundaries,  6 — 17-22. 
Breach  of  contract,  procuring,  4 — 17. 
Building  laws,  7—25. 
Burden  of  proof,  2 — 16,  4 — 7. 
Business  associations,  7 — 1. 
Buyer,  see  sales. 
By-laws  of  corporations,  7 — 6,  10. 

Cancellation,  equity,  6 — 11. 
Carriers,  common,  11 — 7-16. 

acceptance  of  goods,  11 — 9. 

account  and  statistics,  11 — 15. 

baggage,  11 — 12. 

classification,  11 — 13. 

connecting  lines,  11 — 8. 

definition  and  law  of,  11 — 7. 

delivery,  11 — 10. 

discrimination,  11 — 13. 

Interstate  Commerce  Act,  11 — 14. 

lien,  11—8. 

negligence,  11 — 9,  12. 

passengers,  11 — 11. 

rates  and  State  control,  11 — 13,  14. 

responsibility  for  freight,  11 — 8—10. 
Cash  deposit  in  lieu  of    securities   or 

bond,  13—13,  16— 19,  18—8. 
Certified  check,  10—9,  13—9,  11—15, 

14—2,  7,  16—1,  3,  9—12. 
Changes  in  contracts,  16 — 56, 

17—23,  39. 

Charter,  7 — 5,  6,  8,  24. 
Checking  plans,  16 — 30. 
Checks,  10—2,  8. 

payment  stopped,  13 — 14. 
Chief  engineer : 

defined,  16 — 47. 

decision  final,  16 — 47. 

acting  chief,  16 — 53. 
Circumstantial  evidence,  2 — 3,  6. 
Clayton  Act,  7 — 17. 
Collusion,  15 — 2,  6. 
Common  carriers,  see  carriers. 
Common  law,  see  law. 


Compensation : 

architects,  12 — 2. 

experts,  12 — 11. 
Competition : 

for  benefit  of  public,  13 — 7. 
Condition  precedent,  16 — 48. 
Conditional  sales,  see  sales. 
Consideration : 

implied,  3 — 8. 

in  contracts,  3 — 6,  16 — 11,  15. 

mutual  promises,  3 — 7. 

negotiable  instruments,  10 — 4, 18. 

seal,  3 — 7. 

Constitutionality  of  laws,  1 — 8. 
Construction : 

of  statutes,  1 — 14. 

see  contracts,  construction. 
Contractor : 

relations  with  engineer,  12 — 4. 

relation  to  construction,  16,  17. 

understanding  of  conditions, 
16—19. 

verify  information,  14 — 15. 
Contracts,  construction : 

abandonment,  17 — 29. 

acceptance  of  work,  16 — 77. 

accounts  available  to  engineers, 
17—19. 

acknowledgment,  17 — 22. 

adjustment  of  dispute,  16 — 47-54. 

adjacent  property,  16 — 42. 

agreement,  texts,  16 — 10. 

annulment,  16 — 67,  70. 

arbitration,  16 — 51,  17 — 44. 

architects : 

standard  form,  17 — 33-45. 
status  and  decisions,  17 — 36. 

bond,  17—29,  38. 

bond,  text,  16—17. 

cash  in  lieu  of  bond,  16 — 19. 

changes,  16—56,  17—23,  39. 

checking  plans,  16 — 30. 

chief  engineer  defined,  16 — 47. 
acting  chief,  16 — 53. 
decision  final,  16 — 47-54. 

cleaning  up,  16 — 45,  17 — 41. 

company  to  take  work,  16 — 67. 

completed  portions,  16 — 54. 

conclusion,  text,  16 — 79. 

condition  precedent,  16 — 48. 


INDEX 


Contracts,  construction  —  Continued. 
consideration,  16 — 11,  15. 
contractor's  personal  attention, 

16—25-27. 

understanding  of  conditions, 

16—19. 

correction  of  work,  17 — 37. 
cost  plus  percentage  contract, 

17—22-32. 

audit,  17—27. 

costs,  17—24. 

fee  of  contractor,  17 — 26. 
costs  extra  work,  16 — 58. 
crossing  railroads  or  lands,  17 — 20. 
decision  of  chief  engineer, 

16—47-54. 

deducting  moneys,  16 — 40. 
deduction,  equitable,  16 — 31. 
defective  work,  16 — 31. 
definitions,  17—18,  34. 
delay,   16—29,  54,  63, 

17—7,  13,  41. 
detail  drawings,  17 — 35. 
disputes,  16—47-54,  17—31. 
emergencies,  17 — 37. 
emergency  contract  U.  S., 

17—23-32. 

engineer  defined,  16 — 47. 
engineer,  powers,  16 — 47. 
error,  gross,  16 — 49. 
errors  and  discrepancies,  16 — 29. 
estimates,  16—73,  77. 
expediting  work,  16 — 66. 
extension  of  time,  16 — 54,  63. 
extra  work,  16—58,  17—39. 
faith,  good,  16 — 49. 
"furnish  and  do",  16—13, 

17—21,  23. 
general  conditions,  16 — 14. 

text,  16—17-80. 
guaranteed  work,  17 — 15. 
hiring  company  employees,  16 — 45. 
imperfect  work,  16 — 66. 
incompetent  and  disorderly, 

16—44. 

indemnity,  16 — 38. 
injuries  to  persons,  17 — 38. 
inspection,  16—31,  17—27,  37. 

not  acceptance,  16 — 31. 
instructions  and  points,  16 — 28 


Contracts,  construction —  Continued. 
insurance : 

fire,  16—37,  17—38. 

liability,  17 — 4,  38. 
intent  of  documents,  16 — 20, 

17—35. 

intoxicating  liquors,  16 — 45. 
labor,  17—30. 
lands  provided,  16 — 62. 
laws  and  ordinances,  17 — 1. 
legal  representatives,  16 — 12,  79. 
liability  of  commissioner  and  em- 
ployees, 17 — 17. 
liens,  16—40,  17—40. 
liquidated  damages,  16 — 15, 

17—9-12. 

maintenance  and  repairs,  17 — 14. 
measurements,  17 — 19. 
methods  and  appliances,  17 — 6. 
moneys  deducted,  16 — 40. 
night  work,  16—31. 
order  and  discipline,  16 — 44. 
order  of  completion,  16 — 54. 
order  of  construction,  17 — 5. 
ordinances  and  laws,  17 — 1. 
ownership  of  drawings,  17 — 36. 
parts  of  work  taken,  16 — 67. 
patents,  17 — 41. 
payments,  16 — 73,  77, 

17—26,  33,  39,  40. 

failure  to  make,  16 — 73. 

last,  a  release,  17 — 17. 
penalty,  17—9. 
permits,  16 — 22. 
plans  and  specifications : 

intent  of  attached,  16 — 20. 

explanatory,  16 — 20. 
points  and  instructions,  16 — 28. 
prices,  16 — 14,  15. 
progress,  rates  of,  17 — 7. 
protection  of  work,  16 — 23,  17 — 37. 
quantities,  approximate,   17 — 8. 
rejected  materials,  16 — 36. 
rentals,  17—24,  31. 
repairs,  17 — 15. 
rights : 

in  materials,  17 — 19. 

of  various  interests,  16 — 24. 
risk,  16—43,  17—7. 
samples,  17—36. 


INDEX 


Contracts,  construction  —  Continued. 
sanitary  conveniences,  17 — 5. 
separate  contracts,  17 — 42. 
signs  prohibited,  17 — 20. 
specifications  and  plans,  intent, 

16—20. 

specifications,  place  of,  16 — 2. 
stakes,  preserving,  16 — 30. 
stakes  and  batter-boards,  17 — 16. 
standard  contract  form,  architects', 

17—33-45. 

subject  matter,  16 — 1. 
subletting,  16—24,  17—30. 
subcontracts    and    subcontractors, 

16—24-26,  17—43. 
successors,  etc.,  text,  16 — 7-9,  12, 

17—34. 

superintendence,  16 — 26. 
supervision,  17 — 36. 
surety's  consent,  16 — 57. 
suspension  of  work,  16 — 64. 
termination  of  contract, 

17—28,  41,  42. 
time  of  doing  work,  16 — 15. 
transfer  or  sublet,  16 — 24. 
uniform  contract  form,  16 — 1-80. 

text,  16—2-10. 
wages  of  employees,  16 — 40. 
written  order,  extra  work,  16 — 58. 
Contracts,  general,  3 — 1-16. 
agreement,  3 — 1. 
breach,  3 — 14. 

procuring,  4 — 17. 
clearness,  3 — 10. 
competition,  3 — 10. 
consideration,  3 — 6-8. 
corporations,  3 — 6. 
definition,  3 — 1. 
discharge,  3 — 13. 
essentials,  3 — 1. 
evidence,  3 — 10. 
fraud,  3 — 3. 
implied,  3—2,  8. 
impossibility,  3 — 15. 
lawful  subject  matter,  3 — 8. 
licenses,  3 — 8. 
married  women,  3 — 5. 
minors,  3 — 5. 
misrepresentation,  3—4. 
mistake,  3 — 3. 


Contracts,  general  —  Continued. 

mutual  promises,  3 — 7. 

new  agreement,  3 — 15. 

offer  and  acceptance,  3 — 2. 

parties,  3 — 5. 

performance,  3 — 13. 

proof,  3 — 2. 

public  policy,  3 — 9. 

remedies  for  breach,  3 — 16. 

restraint  of  trade,  3 — 9. 
3,  9—2. 
1,3—7. 

specific  performance,  6 — 11. 

subject  matter,  3 — 8,  16 — 1. 

Sunday  laws,  3 — 8. 

tender,  3—14. 

valid  consideration,  3 — 7. 

voluntary  agreement,  3—4. 
Contribution,  equity,  6 — 10. 
Contributory  negligence,  4 — 7, 

8—13,  11,  11—11. 
Copyright,  infringement,  4 — 18. 
Corporations,  7 — 1-29. 

agreement,  7 — 8. 

assessment,  7 — 15. 

bonds,  7—13. 

by-laws,  7—6,  10. 

capital,  7—18. 

capital  stock,  7—6,  8,  14,  18. 

certificate  of  incorporation,  7 — 6. 
of  organization,  7 — 7. 

charter,  7—5,  6,  8,  24. 
amendment,  7 — 13. 
a  contract,  7 — 12. 
form,  7—10. 

Clayton  Act,  7—17. 

directors,  7—7,  9, 10,  19,  21,  22. 

dividends,  7—20. 

evidence  of  existence,  7 — 6. 

executive  committee,  7 — 22. 

Federal  Trade  Commission,  7 — 17. 

first  meeting,  7—6,  8,  10. 

formation,  7 — 6,  8. 

general  discussion,  7 — 4. 

how  created,  7 — 5. 

incorporate  where,  7 — 12. 

incorporation,  7 — 6,  8,  12, 14. 

Interstate  Commerce  Act,  7 — 18. 

kinds  of,  7 — 5. 

meetings,  stockholders',  7 — 20. 


INDEX 


Corporations  —  Continued. 
municipal,  see  municipal, 
objects,  7 — 10. 
officers,  7—7,  9,  19. 
organization,  7 — 6-10. 
organized,  7 — 7. 
party  to  contract,  3 — 6. 
power  of  incorporators,  7 — 6. 
powers,  7 — 11. 
powers  of  State,  7 — 23. 
preferred  stock,  7 — 16. 
promoters,  7 — 18. 
secret  profit,  7 — 19. 
securities,  7 — 13. 
Sherman  Law,  7 — 17. 
State  control,  7—23. 
stock,  10—5,  7—13-16,  18. 

bonus,  7 — 16. 

preferred,  7 — 16. 
stockholders : 

functions,  7 — 19. 

liabilities,  7—15. 
subscriptions,  7 — 14. 
ultra  vires,  7 — 21. 
Cost  plus  percentage  contract, 

17—22-32. 

Costs  of  construction,  17 — 24. 
Courts,  systems  of,  1 — 6. 
Crossings,  11 — 3,  7. 

Damaged  work,  17 — 18. 
Decisions,  reports  of,  1 — 6. 
Deeds,  see  real  property. 
Defects,  see  contracts,  construction. 
Delay : 

construction,  14r— 9, 16—63, 17—13. 

negotiable  instruments,  10 — 26. 
Delivery : 

carriers,  11 — 10. 

negotiable  instruments,  10 — 13. 

real  property,  6 — 2,  8. 

sales,  9—3,  10,  11. 
Depositions,  2 — 11. 
Discovery,  equity,  5 — 14. 
Discrimination,  see  carriers. 
Dividends,  see  corporations. 
Documents,  2 — 4,  13. 

Easements,  3—12,  6—13. 

Emergency  contract,  U.  S.,  17—23-32. 


Eminent  domain : 

real  property,  6 — 16-17. 

railroads,  11 — 4. 
Employers  and  employees,  see  master 

and  servant. 

Endorsement,     see    negotiable    instru- 
ments, indorsement. 
Engineer : 

care  as  to  negligence,  4 — 8. 

error  in  survey,  12 — 4. 

of  construction  denned,  16 — 47. 

powers,  16 — 47. 

public  officer,  12 — 4. 

qualifications  for  railroads,  11 — 4. 

relation  to  evidence,  2 — 2,  9. 

relations  with  contractor,  12 — 4. 

relations  with  others,  12 — 1-13. 

service  expected,  12 — 4. 

skill  required,  12 — 3. 

steps  preliminary  to  construction, 
13—1. 

see  contracts,  chief  engineer. 

see  expert. 
Equity,  6—1-16. 

discussion,  5 — 1. 

established  system,  5 — 1,  2. 

evidence,  5 — 3. 

fiduciary  character  of  engineer,  6 — 9. 

flexibility,  5—3. 

injunction,  6 — 13. 

jurisdiction,  6 — 4. 

list  of  subjects,  6—5. 

maxims,  6 — 5. 

mortgage,  see  mortgage. 

multiplicity  of  suits,  6—4. 

of  redemption,  5—7. 

origin,  6 — 2. 

pleading,  6 — 4. 

procedure,  6 — 3. 

receivers,  6 — 12. 

relief,  kind  of,  6 — 2. 

remedies,  flexibility,  6 — 3. 

rights  and  remedies,  6,  2,  4,  5. 

titles,  5—5. 

trusts,  6 — 5. 
Estates,  see  real  estate. 
Estimates,  16—73,  77. 
Estoppel : 

agency,  8 — 3. 

equity,  6 — 9. 


6 


INDEX 


Evidence,  2—1-18. 

against  interest,  2 — 11,  13. 

best,  2—6. 

boundaries,  6—17,  20,  21. 

burden  of  proof,  2 — 16. 

circumstantial,  2 — 3,  6. 

classes  of  testimony,  2 — 2. 

competency  and  weight,  2 — 1,  17. 

definition,  2 — 1. 

depositions,  2 — 11. 

diagrams,  2 — 14. 

direct  and  circumstantial,  2 — 3,  5. 

documents,  2 — 4,  13. 

duties  of  judge  and  jury,  2 — 1. 

engineers'  opportunities,  2 — 2. 

entries,  2 — 12. 

equity,  5 — 3,  14. 

expert,  2—16,  12—6,  8. 

hearsay,  2 — 9. 

instruments  of,  2 — 4. 

irrelevant  or  immaterial,  2 — 3. 

judicial  notice,  2 — 3. 

maps  and  photographs,  2 — 4,  14, 
12—10. 

models,  2 — 14. 

necessity  and  trustworthiness, 
2—10. 

negligence,  4 — 7. 

opinions,  2 — 15. 

oral,  2 — 8. 

persuasiveness,  2 — 18. 

privileged  communications,  2 — 15. 

quality,  2 — 2. 

real,  2 — 5. 

refreshing  memory,  2 — 12,  12 — 9. 

reputation,  2 — 12. 

res  gestce,  2 — 10. 

secondary,  2 — 7. 

standards  of,  2 — 1. 

view,  2 — 5. 

witnesses,  2 — 4. 

writings,  2 — 7. 

Executive  committee,  see  corporations. 
Exoneration,  equity,  6 — 10. 
Expediting  work,  16 — 66. 
Experts,  2—16,  12—6-13. 

advice  to,  12 — 10. 

compensation,  12 — 11. 

court  appointment,  12 — 12. 

cross  examination,  12 — 7,  9. 


Experts —  Continued. 

ethics,  12—6. 

investigation,  12 — 6. 

opinions,  2 — 15,  12 — 7,  10. 

qualifying,  12 — 7. 

refreshing  memory,  2 — 12,  12 — 9, 

scientific  facts,  12 — 8. 

services,  12 — 11. 

valuation,  12 — 13. 

value  of  evidence,  12 — 8. 

values,  12 — 9. 

yes  or  no,  12 — 9. 
Extension  of  time,  16 — 54,  63. 
Extra  work,  1&— 3,  8,  16—58,  17—39. 

Facts : 

for  jury,  1 — 12. 

in  fraud,  4 — 3. 

in  torts,  4 — 2. 

Federal  Trade  Commission,  7 — 17. 
Fences,  railroad,  11 — 5. 
Fires,  railroad,  11—12. 
Fraud: 

constructive,  5 — 9. 

contract,  3 — 3. 

equity,  5 — 9. 

fiduciary  character  of  engineer, 

6—9. 
Frauds,  Statute  of : 

acceptance  and  receipt,  9 — 8. 

contracts,  3 — 11. 

contract  unenforceable,  9 — 7. 

lease,  6 — 11. 

memorandum,  9 — 8. 

part  performance,  9 — 8. 

sales,  9 — 7. 

General  conditions  of  contracts, 

16—14, 17-80,  17—34. 
Grade  separation,  11 — 15. 
Grantor,  deeds,  6 — 6. 

Health  and  comfort,  4 — 16. 
Health  and  safety,  8—19. 
Hearsay,  see  evidence. 
Highways : 

boundaries,  6 — 20. 

crossings  of  railroads,  11 — 3,  7. 

easement,  7 — 28. 

landowner's  right,  7 — 28. 


INDEX 


Highways  —  Continued. 
negligence  as  to,  4 — 5. 
rights  of  public  in,  4 — 10. 
title  of  municipality,  7 — 28. 

Imperfections  in  work,  16 — 66. 
Indemnity,  16—38. 
Independent  contractor,  8 — 16. 
Incorporation,  7 — 6,  8,  12,  14. 
Indorsement,     see     negotiable     instru- 
ments. 
Information  for  bidders,  14 — 1-18. 

bids  in  words  and  figures,  14 — 1,  5. 

bids  opened  and  read,  14 — 1,  4. 

bids  rejected,  14—3,  9. 

blank  forms  required,  14 — 1,  5. 

bond  required,  14 — 2,  6. 

certified  check,  14—2,  7. 

deposits  returned,  14 — 2,  6. 

examination  by  bidder,  14 — 3. 

Hill  View  reservoir,  14 — 13. 

irregular  bids,  14 — 3,  10. 

labor  requirements,  14 — 11. 

plans  seen  where,  14 — 1,  5. 

prices,  14 — 1,  5. 

quantities,  14 — 2,  8. 

quantities  approximate,  14 — 2,  8. 

sample  form,  14 — 1. 

special  requirements,  14 — 12. 

state  qualifications,  14 — 3,  10. 

surety,  14 — 2,  6. 

time  of  beginning  and  ending, 
14—3,  9. 

unbalanced  bids,  14—3,  10. 
Infringement  of  patents,  etc.,  4 — 18. 
Injunction,  6 — 13. 
Inspection : 

sales,  9 — 14. 

work,  16—31,  17—27,  37. 
Insurance : 

fire,  16—37,  17—38. 

liability,  17—4,  38. 
Intent : 

plans    and    specifications,    16 — 20, 
17—35. 

writings,  1 — 15. 
Interpleader,  equity,  6 — 16. 
Interpretation  of  statutes,  1 — 14. 
Interstate  Commerce  Act,  7 — 18, 
11—14. 


Interurban  railroads,  11 — 7. 
Intoxicating  liquors,  16 — 45. 
Introduction,  1 — 1-16. 
Inventions,  8 — 9,  12 — 3. 

Judge : 

duties,  evidence,  2 — 1. 
general,  1 — 12. 
negligence,  4 — 8. 
Judicial  notice,  2 — 3. 
Jurisdiction  of  courts : 
equity,  5 — 4. 
ousting,  16 — 48,  50. 
Jury: 

duties,  evidence,  2 — 1. 
general,  1 — 12. 
experts,  12 — 8. 
negligence,  4 — 8. 
in  equity,  5 — 3. 

Labor  laws,  14—11,  17—2,  30. 
Lading,  bill  of,  10—2,  11—9. 
Lands : 

for  construction,  13 — 5. 

for  railroads,  11 — 4. 

provided  for  contractor,  16 — 62. 

see  also  real  property. 
Law: 

common,  definition  and  powers, 
1—2. 

constitutional  questions,  1 — 8. 

construction,  1 — 10,  14. 

merchant,  10 — 4,  7. 

purpose,  1 — 1. 

statute,  definition,  1 — 2,  7. 
examples,  1 — 7,  7 — 6,  8, 
10—6. 

use  of  decisions,  1 — 6. 

value  of  stability,  1 — 4,  7. 
Lawsuit,  conduct  of,  1 — 10. 
Lease,  6—11-13. 
Liability : 

agent,  8 — 5. 

commissioners,  17 — 17. 

directors,  7 — 22. 

master,  8—9-13. 

partners,  7 — 3. 

principal,  8 — 4. 

stockholders,  7 — 15. 

third  parties,  8 — 5,  6. 


8  INDEX 

Licenses :  Mortgage  —  Continued. 

contracts,  3 — 8,  12.  legal  title,  6 — 15. 

definition,  6 — 14.  release,  6 — 15. 

vs.  trespass,  4 — 9.  Municipal  corporations,  7 — 23-29. 

Lien,  mechanic's,  6 — 17,   16 — 40,  award  of  contracts,  7 — 26. 

17 — 4Q.  bonds  and  warrants,  7 — 28. 

Liquidated    damages,    9 — 12,    16 — 15,  building  laws,  7 — 25. 

17 — 9.  business  corporations,  7 — 23. 

Location  of  railroads,  11 — 2.  charter,  7 — 24. 

civil  service,  7 — 26. 

Maintenance  and  repair,  17 — 14.  counties,  towns,  school  districts, 
Master  and  servant,  8—7-19.  7—27. 

agent  and  servant,  8 — 1.  departments,  7 — 25. 

care  in  employing,  8 — 12.  express  grants,  7 — 27. 

care  required  of  employer,  8 — 11.  formalities,  7 — 26. 

co-employee,  8—10-13.  officers,  7—25,  29. 

contributory  negligence,  8 — 11,  13.  organized  how,  7 — 23. 

defects  of  plant,  8—12.  powers,  7—24. 

Employer's  Liability  Acts,  8 — 14.  State  control,  7 — 25,  27. 

fellow-servant,  8 — 10-13.  taxation,  7 — 28. 

independent  contractor,  8 — 16.  title  in  highways,  7 — 28. 

inventions,  8 — 9.  warrants,  town  meetings,  7 — 27. 

locality  of  employment,  8 — 8.  Mutual  promises,  3 — 7. 

negligence  of  employee,  8 — 10-13. 

plant  required,  8 — 12.  Negligence,  4 — 4-8. 

regulations  for  safety,  8 — 13.  bailment,  4 — 5. 

remedy  for  discharge,  8 — 9.  burden  of  proof,  4 — 7. 

responsibility  of  master,  8 — 9-13.  common  carriers,  11 — 9. 

rights  of  employee,  8 — 8.  contributory,  4 — 7. 

risk,  8 — 11.  damages,  measure  of,  4 — 8. 

rule  stated,  8—10.  definition,  4 — 4. 

vice  principal,  8 — 13.  employees,  8 — 10,  12. 

Workmen's  Compensation  Act,  essentials,  4 — 7. 

8 — 15.  evidence,  4 — 7. 

Measurements,  17 — 19.  fellow-servant,  8 — 10-13. 

Mechanic's  lien,  6 — 17,  16 — 40,  17 — 40.  highways,  4 — 5. 

materials,  6 — 17.  in  nuisance,  4 — 17. 

Minor,  3 — 5,  8 — 3.  negotiable  instruments,  10 — 32. 

Misrepresentation,  3 — 4, 19 — 3.  professional  service,  4 — 6. 

Mistake  :  proximate  cause,  4 — 6. 

contract,  3—3.  right  of  support,  4—12. 

equity,  6 — 8.  Negotiable  instruments,  10 — 1-37. 

Monthly  estimate,  16 — 73.  acceptance,  10 — 2,  15,  33. 

Monuments,  see  boundaries.  accommodation,  10 — 7,  18. 

Mortgage  :  agent,  10 — 14. 

an  estate,  6 — 7.  alteration,  10 — 31. 

definition,  5 — 6,  6 — 14.  ambiguous,  10 — 14. 

equity  of  redemption,  6 — 7,  bank  notes,  10 — 5. 

6—15.  bearer,  10—12,  20,  21. 

foreclosure,  5—7.  bill  of  lading,  10—2. 


INDEX 


9 


Negotiable  instruments  —  Continued. 
bill  of  exchange,  10—1,  7,  10. 
bills  in  sets,  10—35. 
blanks,  filling,  10—13. 
certainty  of  sum,  10 — 10. 
certificates  of  deposit,  10 — 5. 
certificates  of  stock,  10 — 5. 
certified  checks,  10 — 9. 
checks,  10—2,  8. 
collateral  security,  10 — 11. 
consideration,  10 — 4,  18. 
computation  of  time,  10 — 7,  26. 
coupon  bonds,  10 — 5. 
dates,  10—12,  13. 
definitions,  10 — 6. 
delay,  10—26. 
delivery,  10 — 13. 
demand,  10—10,  12. 
discharge,  10 — 30. 
dishonor,  notice,  10 — 27. 
drafts,  10—4. 

foreign  and  inland  bills,  10—4,  7. 
forged  checks,  10 — 9. 
forgery,  10—15,  31. 
form,  10—10. 
holder : 

for  value,  10 — 18. 

in  due  course,  10 — 22. 

rights  of,  10 — 22. 
honor,  10—33. 

imperfect  or  incomplete,  10 — 13. 
indorsement,  10—3,  19-22. 
innocent  purchaser,  10 — 23. 
law  merchant,  10 — 4,  7. 
letters  of  credit,  10 — 5. 
liability  of  parties,  10—23. 
Negotiable  Instruments  Law, 

10—5-37. 

negotiation,  10 — 2,  18. 
notice,  10 — 27. 
order,  10 — 12. 
payment,  10 — 25,  30,  34. 
patent  right  notes,  10 — 35. 
presentment,  10 — 16,  25. 
promissory  notes,  10 — 3,  8. 
promises  of  notes,  10 — 11. 
protest,  10—29,  32. 
omissions,  10 — 11. 
recourse,  10 — 20. 
speculative  consideration,  10 — 35. 


Negotiable  instruments  —  Continued. 

tender,  10—30. 

time  determination,  10 — 11. 

transfer,  10—13. 

traveler's  checques,  10 — 5. 

ultra  vires,  7 — 21. 

warranty,  10 — 24. 
Night  work,  17—18. 
Note  books,  2 — 12. 

ownership,  12 — 3. 
Notice : 

acceptance  of  bid,  16 — 3-12. 

equity,  6 — 10. 

how  served,  16 — 70. 

negotiable  instruments,  10 — 27. 
Nuisance,  4 — 16,  17. 

Offer  and  acceptance,  3 — 2,  16 — 1. 
Officers,  public,  12 — 4. 
\  Opinion : 

evidence,  2 — 15. 

expert,  12—7,  10. 
Order : 

and  discipline,  16 — 44. 

of  work,  16—54,  17—5. 
Organization  of  corporations, 

7—6-10. 
Ownership : 

inventions,  12 — 3. 

note  books,  12 — 2,  3. 

plans,  12—2,  3, 17—36. 

Partition  of  lands,  equity,  6 — 16. 
Partnership,    7 — 1-4. 

accounts  closed,  6 — 15. 

agreement,  7 — 1. 

definition,  7 — 1. 

dissolution  of,  7 — 3. 

fiduciary  character,  7 — 2. 

firm  name,  7 — 2. 

good-will,  7—2. 

liability,  7—3. 

limited,  7 — 3. 

principals  and  agents,  7 — 2. 

private  debts,  7 — 3. 

proof  of,  7 — 4. 

property,  7 — 1. 
Passengers,  11 — 11. 
Patents,  infringement,  4 — 18. 


10 


INDEX 


Payments : 

monthly,  16 — 73. 

failure  to  make,  16 — 73. 

negotiable  instruments, 
10—25,  30,  34. 

sales,  9 — 10. 
Penalties,  6—12,  17—9. 
Permits  in  construction,  16 — 22. 
Plans : 

copyright,  12 — 3. 

ownership,  12 — 2,  3. 

part  of  contract,  16 — 20. 
Pleadings,  1 — 11. 

equity,  6 — 4. 

law,  1—11. 
Powers : 

corporation,  7 — 11. 

engineer,  16 — 47. 
Prescription,  see  real  property. 
Prices,  14—1,  5,  15—3,  7. 

see  also  contracts,  construction. 
Principal : 

agency,  8—3-6. 

partnership,  7 — 2. 
Professional  service,  4 — 6,  12 — 3. 
Promissory  note,  10 — 3,  8,  10. 
Proof,  see  evidence. 
Proposal,  15—1-15. 

acknowledgment,  16 — 4. 

agreement,  16 — 3,  8. 

agreement  for  certified  check, 
15—1,  3,  9-12. 

award,  16—13. 

bidders  in  arrears,  16 — 2,  7. 

bond,  16—3,  9-12,  18—10. 

collusion  by  bidders,  15 — 2,  6. 

examination  of  conditions,  16 — 2,  7. 

extra  work,  16 — 3,  8. 

lowest  bidder,  15 — 14. 

notice,  16—3,  9-12. 

offer  and  acceptance,  16 — 1,  11. 

opening  bids,  15 — 13. 

persons  interested,  16 — 2,  6. 

prices,  16 — 3,  7. 

qualification  of  bidders,  16 — 3,  4. 

quantities,  16 — 3,  9. 

rejection  of  bids,  13—16,  14—3,  9, 
15—14. 

sealed  box,  14 — 4. 

surety,  15—3,  6,  9-11. 


Proposal  —  Continued. 

surety's  consent,  15 — 5. 

unbalanced  bids,  14 — 3,  10. 

words  and  figures,  14 — 1,  5,  16 — 3. 
Protecting  work,  16—23,  17—37. 
Public  policy,  3 — 9. 

Qualifying  by  expert,  12 — 7. 
Quality,  sales,  9 — 4,  9. 
Quantities,  approximate,  14 — 8,  16 — 9, 
17—8. 

Railroads,  11—1-16. 

accounts  and  statistics,  11 — 15. 
bonds,  11—1. 

common  carriers,  see  carriers, 
construction,  11 — 5. 
contractor's  work  adjacent  to, 

16—42. 

crossings,  11 — 3,  7. 
eminent  domain,  11 — 4. 
fencing  and  cattle,  11 — 5. 
financing,  11 — 1. 
fires,  11—12. 
grade  separation,  11 — 15. 
incorporation,  11 — 1. 
interurban,  11 — 7. 
location,  11 — 2. 
private  tracks,  11 — 4. 
right  of  way,  11 — 4,  5. 
route,  11 — 1,  3. 
safety  appliances,  11 — 15. 
securing  lands,  11 — 4. 
use  of  streets,  11 — 6. 
valuation,  11 — 15. 
Workmen's  Compensation  Act, 

11—15. 

Railways,  street,  11 — 6. 
Rates,  see  carriers. 
Ratification,  see  agent. 
Real  property,  6 — 1-22. 
boundaries,  6 — 17-22. 
deeds,  6—2-9. 

acknowledgment,  6 — 8. 

essentials,  6 — 7. 

quitclaim,  6 — 4-7. 

recording,  6 — 8. 

seal,  6 — 7. 

signed,  6 — 7. 

warranty,  6 — 2-6. 


INDEX 


11 


Real  property  —  Continued. 
wife's  signature,  6 — 8. 
witnesses,  6 — 7. 

definition,  6 — 1. 

delivery,  6—2,  8. 

descriptions,  6 — 21. 

easements,  6 — 13. 

eminent  domain,  6 — 16. 

estates,  6 — 1. 

fee  simple,  6 — 1. 

highways,  6 — 20. 

lease,  see  lease. 

mechanic's  lien,  6 — 17. 

monuments,  6 — 18. 

mortgage,  see  mortgage. 

prescription,  6 — 14,  20. 

statute  of  frauds,  3 — 9,  12. 

tenants,  6—11,  13. 

title : 

abstract,  6 — 9. 
land  courts,  6 — 10. 
search,  6 — 9. 

waters  as  boundaries,  10 — 19. 
Receipt,  see  sales. 
Receivers,  5 — 12. 
Refreshing  memory,  2 — 12,  12 — 9. 
Rentals,  17—24,  31. 
Repair,  see  contracts,  construction. 
Repeal  of  statutes,  1 — 15. 
Reports  of  decisions,  1 — 6. 
Rescission,  equity,  5 — 11. 
Restraint  of  trade,  3 — 9. 
Right  of  support,  4—11-13. 
Right  of  way,  11 — 4,  5. 
Rights : 

contiguous  contractor,  16 — 24. 

equitable,  6 — 2,  5. 

public,  in  highways,  4 — 10. 
Riparian  rights,  4 — 13. 
Risk: 

contractor's,  see  contracts, 
construction. 

to  employees,  8 — 11. 


1—1-17. 
acceptance,  9 — 8,  14. 
ascertained  goods,  9—4. 
cash  sales,  9 — 5. 
choses  in  action,  9 — 6. 
conditional,  9—5,  11,  17. 


Sales  —  Continued. 

contracts,  9 — 2. 

definition,  9 — 1. 

delay,  9—14,  16. 

delivery,  9—3,  10,  11. 

duties  of  buyer,  9 — 14. 

duties  of  seller,  9 — 8. 

Frauds,  Statute  of,  9 — 7. 

future  goods,  9 — 5. 

future  payment  and  delivery, 
9—10. 

inspection,  9 — 14. 

involuntary,  9 — 2. 

lands,  connected  with,  9 — 6. 

lien,  seller's,  9 — 14. 

notice  by  seller,  9 — 11. 

perished  goods,  9 — 6. 

price,  9 — 7. 

purpose  of  article,  9 — 13. 

quality  and  character,  9 — 4,  9. 

quantity,  9 — 4,  9. 

receipt,  9 — 8. 

risk,  9—16. 

sample  or  description,  9 — 13. 

specific  article,  9 — 9. 

specific  characteristics,  9 — 9. 

specific  goods,  9 — 3. 

stoppage  in  transit,  9 — 15. 

suitable  for  purpose,  9 — 9. 

termination  of  transit,  9 — 15. 

title,  9—8,  11,  14,  16. 

Uniform  Sales  Act,  9 — 1,  17. 

vs.  contract  to  sell,  9 — 1,  3. 

vs.  labor  and  materials,  9 — 2. 

warranty,  9 — 12,  13. 

weighing,  measuring,  testing,  9 — 4. 
Sanitary  regulations,  14 — 15,  17 — 5. 
Seal,  3—7,  6—7. 
Securities  of  corporation,  7 — 13. 
Servant,  see  master  and  servant. 
Sherman  Law,  7 — 17. 
Specific  performance,  6 — 11. 
Specifications,  19 — 1-7. 

see  also  contracts,  construction. 
Stakes,  16—30,  17—6. 
Statute  law,  see  law. 
Statutes : 

construction  or  interpretation, 

1—14. 
Stock,  see  corporations. 


12 


INDEX 


Stockholders,  see  corporations. 

Street  railways,  see  railways. 

Subcontracts  and  subcontractors, 
see  contracts,  construction. 

Subject  matter,  3 — 8,  16 — 1. 

Subletting,  see  contracts,  construction. 

Subrogation,  equity,  5 — 10. 

Sunday  laws,  3 — 8. 

Superintendence,     see     contracts,  con- 
structiom 

Surety,  14—2,  6,  15—3,  5,  6,  9-11, 
16—57. 

Suspension  of  work,  see  contracts,  con- 
struction. 

Tenants,  6—11,  13. 
Tender,  3—14,  10—30. 
Title : 

lands,  6—9. 

sales,  9— 8,  11,14,  16. 
Torts,  4—1-18. 

breach  of  contract,  procuring, 
4—17. 

copyrights,  patents,  trademarks, 
4—18. 

definition,  4 — 1. 

fraud  or  deceit,  4 — 2. 

list,  4—2. 

negligence,  see  negligence. 

nuisance,  see  nuisance. 

right  of  support,  4 — 11-13. 

trespass,  see  trespass. 

vs.  crimes,  4 — 1. 

water  rights,  see  water. 

ways  of  occurrence,  4 — 2. 
Trespass,  4 — 9-11. 

against  possession,  4 — 10. 

by  surveyors,  4 — 9. 

definition,  4 — 9. 

duty  of  engineer,  4 — 11. 

entry  under  eminent  domain,  4 — 9. 


Trespass  —  Continued. 

on  leased  land,  6 — 12. 

vs.  license,  4 — 9. 
Trial  at  law,  1—10,  13. 
Trusts  and  trustees : 

definitions,  6 — 5. 

directors  of  corporation,  7 — 22. 

duties  of  trustee,  6 — 6. 

express  trusts,  5 — 6. 

implied  trusts,  5 — 6. 

Ultra  vires,  7—21. 

Unbalanced   bids,   see  information  for 

bidders. 
Unconscionable  stipulations,  equity, 

5—12. 
Uniform  contract  form,  16 — 1-80. 

Valuation,  12—13. 
Verdict,  1 — 13. 
View,  2 — 5. 

Wages  in  contract,  construction,  16 — 40. 
Warrant,  town  meeting,  7 — 27,  13 — 3. 
Warranty : 

lands,  6—2-6. 

negotiable  instruments,  10 — 24. 

sales,  9—12,  13. 
Water : 

courses,  4 — 13. 

classification  waters,  4 — 13. 

economic  use,  4 — 14. 

percolating,  4 — 15. 

priority  of  appropriation,  4 — 14. 

power  and  mill  privileges,  4 — 14. 

reasonable  use,  4 — 13. 

rights,  4—13-16. 

riparian  rights,  4 — 13. 

surface,  4 — 15. 
Witnesses,  see  evidence. 
Workmen's  Compensation  Act,  11 — 15. 


